In the midst of the general doom and gloom, fears about how the crisis will affect poor countries, and fierce criticism of markets, states, and aid agencies, perhaps it’s healthy to step back to the big picture, to recognize there has already been some very real good news. The graph below shows some overall statistics for the developing world:
This graph has a mixture of good news that all of the much-criticized triad of markets, states, and aid can take partial credit for. Markets obviously get at least some credit for the reduction in global poverty and increase of global average income. States supply public goods like education, water, and health, and there has been progress on all of these. Aid deserves some credit for successes in health, as already stressed in a previous blog post.
One group that doesn’t deserve much credit is “development experts,” because there is a terrible crisis of confidence in development economics now, where we all freely confess we don’t really know what to advise governments on how to speed up development.
Positive stories are also important to correct unbalanced stereotypes, like the one discussed a couple of days ago by June Arunga on this blog about the rich American woman who couldn’t believe Africans had cell phones. The figure below shows the huge cell phone boom in Africa (the world’s most rapidly growing cell phone market). This one is a success for resourceful African entrepreneurs, like Alieuh Conteh who started a cell phone business right in the middle of the civil war in the DR Congo, with makeshift cell phone towers made out of pieces of scrap metal welded together. He got millions of subscribers and eventually sold the company for a ten-figure sum.
Yes, there is a terrible crisis now, not to mention that all of these indicators are still deeply unsatisfactory, so we all keep criticizing and holding accountable the market, state, and aid actors who fall so woefully short. But let none of us forget how much development already happened over the last half-century, which may inspire us with hope that more step-by-step improvements in markets, states, and aid could make even more development possible.
11 Comments
“One group that doesn’t deserve much credit is “development experts,” ” is a rather broad statement when the subject seems to be restricted to development economists. Experts that have worked on nutrition, clean water, maternal and child healthcare, and primary education can surely take some credit for the positive trends you indicate. And perhaps even development economists got a few things right along the way as per capita income has gone up.
Can you please show this graph for different regions? I’d be curious to see how much of this improvement comes from India and China.
@ Purple (from comments on this article on Mark Thoma’s blog)
Yes, Purple, China is a Communist country with one party rule, a mixed economy and one which pays little attention to international experts like Dr. Easterly – - one whom I happened to admire until he started posting this nonsense.
And yes take China out of the data and all the nice upward sloping lines change directions.
No wonder no one has much credence in international experts, but than they are part of the same establishment that gave us this mess!
take China out of the data and[...]
Count me amongst those who are curious what the data ex-China, or ex-China and ex-India are.
That said, China has 1.4ish billion people. It is a huge accomplishment all on its own that so many of its citizens have escaped any-definition poverty. Ditto India, with 1.1ish billion people. Both are bigger than the “bottom billion”. More progress in either or both country would be huge on the global humanitarian side, regardless of what the rest of the world’s basket cases do.
I still stand by my thoughts posted on this site and elsewhere regarding underdeveloped country economic status. If the government in charge consciously pursues pro-growth policies, i.e. wealth creation policies, then the country’s economy will grow, regardless of whether or not they are oriented towards dispersed planning of a privately developed sort (i.e. free markets), or oriented towards central planning of an “industrial policy” sort, a la Dani Rodrikenomics.
If they don’t deliberately (or accidentally) pursue such growth policies of one type or another, as opposed to confiscatory policies, they won’t grow, regardless of aid of any sort. End stop.
Sir,
I am reading your blog with great interest. I was wondering if you could give me advice on who to give my money to. Like many other people I would be willing to donate a decent sum regularly to human causes, since poverty really bothers me. I do not however want to donate to an organization where I know that a large part of the money will never leave the country, or to one that advertises extensively, or to one that has a political agenda in the developed world. I would appreciate greatly if you could discuss various options of organizations that are worthy to donate to, and I am sure that other readers might find it helpful too.
Many thanks!
A good source for growth data minus China:
Riding the Elephants: The Evolution of World
Economic Growth and Income Distribution at
the End of the Twentieth Century (1980-2000)
Albert Berry and John Serieux
Not as bleak as I said but barely positive since 1990, its plenty bleak though when you turn the page from growth to distribution ex-China, everyone else is deteriorating.
SS
Andthis from the abstract:
Riding the Elephants: The Evolution of World
Economic Growth and Income Distribution at
the End of the Twentieth Century (1980-2000)
Albert Berry and John Serieux
Abstract
Th is paper presents estimates of world economic growth for 1970-2000, and changes in the
intercountry and interpersonal distribution of world income between 1980 and 2000. Th ese
estimates suggest that, while the rate of growth of the world economy slowed in the 1980-2000
period, and average within-country inequality worsened, the distribution of world income among
individuals, nevertheless, improved a little. However, that result was wholly due to the exceptional
economic performances of China and India. Outside these two countries, the slowdown in world
growth was even more dramatic, the distribution of world income unequivocally worsened, and
poverty rates remained largely unchanged.
Could you share with us the sources for the interesting first chart? When you write “developing world”, which selection of countries do you take?
Thanks for an excellent blog.
Ditto phme: a second call for the data sources used for the graphs.
Many thanks.
source?
Better life, liberty, and lager
by William Easterly Global infant mortality has halved since 1960. The poorest countries are steadily catching up to the richest on other critical measures of the quality of life: life expectancy, literacy, political and civil rights – not to mention…