Poorest countries must go for economic growth

London, May 22:

The world will contain four billion people living in abject poverty by 2050 unless the poorest countries adopt policies to deliver rapid and sustained growth over the coming decades, a report backed by the World Bank stated.

After a two-year investigation, a group of policymakers and economists published a blueprint designed to allow the least developed countries (LDCs) to emulate the 13 countries that have expanded at an average rate of at least seven per cent a year for 25 years or longer since the second world war.

Professor Mike Spence, chairman of the Commission on Growth and Development, said there was no prospect of meeting the Millennium Development Goals (MDGs) set by the UN — which include halving of the number of people living in poverty by 2015 — without faster growth.

Two billion of the six billion people in the world live in countries with stagnating or declining incomes but the report stated this figure would rise to four billion, if they continued to suffer from low growth. “The Growth Report kills off once and for all the misguided notion that you can lift people out of poverty in the absence of growth,” Spence said.

“It is impossible for poor countries to lift large populations out of poverty without growth. Equality of opportunity and a focus on individuals and families, gender inequalities and economic security, however, is critical to maintaining the support for growth-oriented policies.”

The report stated that the 13 countries that had grown rapidly in the post-war era were diverse, including Indonesia, Oman, Malta, Brazil, Botswana and China, but all had made the most of the global economy. “This is their most important shared characteristic and the central lesson of this report. Sustained growth at this pace was not possible before 1950. It became feasible only beca-use the global economy became more open and more tightly integrated. The global economy is still a work in progress, of course, but its effects have been dramatic.”

“The high-growth countries benefited in two ways. One, they imported ideas, technology and know-how from the rest of the world. Two, they exploited global demand, which provided a deep, elastic market for their goods. Inflow of knowledge dramatically increased economy’s productive potential; the global market provided the demand necessary to fulfil it. To put it very simply, they imported what the rest of the world knew, and exported what it wanted.”

Spence said faster growth was possible but required strong leadership, good governance and a commitment to equity. The report divided developing countries into four groups — sub-Saharan Africa, small countries, resource-rich states and middle-income countries — and said growth strategies had to be tailored to fit the requirements of individual nations.

“Growth requires leadership, persistence and engagement with the global economy,” Spence said. “It also requires advanced economies to play their part as well — bringing an end to the current focus on energy subsidies and biofuels and an end to the protectionist policies which limit developing world access to the global markets that are so central to growth.”