On Political Books

May/ June 2013 Self-Made Countries

Why poor nations aren’t prisoners of their history.

By Charles Kenny

But on one final point, Henry’s conclusion is spot on. The strength of developing economies that used to be mired in debt and poor policies is increasingly important to rich countries that are now drowning in red ink and struggling with policy reform themselves. “The future prosperity of countries like the United States, Germany and Japan depends crucially on the continued high performance of the BRICs (Brazil, Russia, India and China) and beyond.” If there’s one clear example of a turnaround in global economics, this is it. And however it was that the rest of the world got richer, that they did so is one of the best things to happen to the West in a long time.


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Charles Kenny is senior fellow at the Center for Global Development.

Comments

  • Hirron on May 29, 2013 9:17 PM:

    There is no "perfect" system of of economic management.

    America saw its success after shutting out British investment and creating a near instant turnover of wealth post revolution.


    Russia post revolution saw an economic boom in the first decade or so where the economy based on more or less informal measurements doubled-tripled in size, this is largely courtesy of large amounts of money dumped by government into industry, the more or less obvious kickback of this method was that money was obtained by selling off and taxing at high enough rates that many of their own people starved. This boom turned fizzle and went further on into stagnation

    China saw an economic boom when it reduced investment barriers, yet still has systems that prevent foreign takeover of Chinese firms

    Bangladesh still has yet to see an economic tide despite having nearly completely liberalized its policies

    Congo saw its economy collapse in the 80's after america finished using it as a springboard against the USSR

    South Korea, another american springboard saw a boom

    All of this is measured on GDP, which itself can be considered a flawed measure.

    Thailand has seen its economy boom after its fertility rate fell, India is seeing it boom because of its large population


    The truth is almost all legislation should be dynamic / sunset, there is no "correct" direction when you are talking about an interlocking system.


    Bringing this back to talking about how to develop countries the keystone is creating a pool of wealth concentrated in the purchasing of industrial machinery. that said

    . Entrenched holders may or may not want expansion and competition, why expand manufacturing when you can be rich off of local presence and monopolize
    - Change the hands of who owns it
    . revolution
    . loosening of international financing and reduction of protectionist measures forces competition
    - anti-monopolization laws

    . Detached foreign investments. If everything being done is done by hand your net result is that foreign investment are employers but not the developers of the economy

    - reduce anti-monopolization laws, allow for development of local tigers
    - subsidize local industry via tax revenue from international corporations
    - create greater incentives for locals to invest
    - put up minimum standards for foreign investment, draw a fine line between coming for cheap labour and coming to develop the economy and make a profit

    This is still taking in simplified views in that it pays no attention to cultural differences, economic global situations and so forth