From yesterday's Financial Times: Being a developing country used to be easy.
This is by Alan Beatie. He continues:
You followed leaders - Japan, Hong Kong, Taiwan, South Korea - up a well-trodden ladder from agriculture through manufacturing to services. Starting with tilling the soil, you moved on to turning out T-shirts, then toys, then tractors, then television sets, and ended up trading Treasuries.
The gist of this foolishness is that China is screwing up that EZ ladder to success everybody had enjoyed previously.
I guess the first question to ask is who exactly followed those leaders up that well trodden ladder to a financial services economy before China and India got on? Anybody from Sub Saharan Africa? Anybody from Latin America? Anybody besides the cited leaders??
In one sense being a developing country is easy, its actually doing some developing (ie catching up to the leaders) that is so hard, has been hard in the past and is still hard today.
We didn't call Beattie's leaders the Asian Miracle countries because they did something easy.
The second question to ask is whether those cited leaders made it all the way to the top as Beattie implies. Well according to the Penn World Tables, Taiwan is stalled out at around 55% of US per capita income ( 54.25% in 2004), and Korea is still grinding away, but is only up to around 50% of US income. So even the few miracle countries that have substantially improved relative to the US still have a very long way to go.
By the way, China is at 14.6% of US per capita income in 2004 and India at around 9%. Despite their recent gains, they are very very poor countries.
The third question to ask is, even if China and India are making it harder for other countries to catch up, if we had to pick to incredibly poor countries to start growing rapidly, wouldn't we pick China and India, simply based on their huge populations? Thats a lot better than having the Gambia and Boliva win the growth takeoff lottery, isn't it?
My last question is directly to Alan Beattie: What you talking 'bout Willis??