Club for Growth

The past decade might have been grim for the economically stagnant West, but without a booming developing world it would have been much worse.

BY CHARLES KENNY | OCTOBER 24, 2011

The latest data on economic growth released this year by the World Bank confirms what we all already knew: The United States and most of the West had a pretty grim decade between the turn of the millennium and 2010. It's a well-worn story now, a decade bookended by bursting bubbles, with limping, debt-financed progress in between. But there is a lot of good news elsewhere in the bank's assessment of gross domestic product (GDP) growth around the globe: Over the same period, 19 economies doubled in size. Both the causes and consequences of that growth varied considerably, but one thing is clear -- the United States would have been even worse off without it.

The U.S. economy itself expanded by 18 percent from the decade's start to end, ahead of Britain (15 percent), Germany, and Japan (both less than 10 percent). Ranking the 164 countries for which the World Bank has data on GDP growth over the decade, that means the United States came 134th, with Britain, Germany, and Japan in 140th, 154th, and 155th place, respectively. Even the apparent U.S. lead in this category of slimeless snails was partially devoured by a faster growing population, so incomes per head increased by around 1 percent a year in all four countries. (Iraq placed dead last in the global ranking -- surely another blow to the reputation of American economic leadership.)

At the same time, the top 19 countries in the world in terms of decade-long growth saw their GDPs more than double over the ten years from 2000 to 2010. And that top 19 included some really big countries -- not least India and China -- so nearly 2.6 billion people benefited from all of that economic dynamism.

Just as significantly, Africa has been going gangbusters -- though you probably haven't noticed, since the whole region of 49 countries still has a combined economy smaller than the state of Texas. Yet within the club of economies that doubled in size were no less than eight from sub-Saharan Africa, the region traditionally written off as a hopeless economic backwater. Indeed, that region took 17 of the top 40 spots in the decade's global GDP growth rankings; its GDP is 66 percent larger than it was in 2000. Populations have expanded there, too, by around 28 percent over the decade -- but even accounting for more people, the average income in the region is about a third higher than it was 10 years ago.

There is no single answer to the question of what is behind the economic dynamism of the club of doubled economies. Some benefited from expanding output and high prices of minerals exports. The World Bank's data, along with State Department's, suggest that nine of the 19 fastest growers rely considerably on extractive industries. Equatorial Guinea and Azerbaijan, the top two performers worldwide -- whose economies more than quadrupled in size over the decade -- are both highly dependent on oil. So are Turkmenistan (third place) and Angola (fourth). Sierra Leone, Bhutan, Chad, Tajikistan, and Kazakhstan round out the economies highly reliant on extractive industries. Others owe at least some of their dynamism to the rebound from recent and devastating civil wars, including Rwanda and (again) Sierra Leone.

But the rest -- China, India, Ethiopia, Mozambique, Cambodia, Armenia, Belarus, Uganda, and Vietnam -- don't easily fall into either of those categories. None have considerable reliance on mineral wealth, and while some were previously embroiled in civil war, their conflicts ended at least five years before the turn of the millennium. The factors behind their rapid growth are probably as varied as the countries themselves.

PUNIT PARANJPE/AFP/Getty Images

 

Charles Kenny is a senior fellow at the Center for Global Development, a Schwartz fellow at the New America Foundation, and author, most recently, of Getting Better: Why Global Development Is Succeeding and How We Can Improve the World Even More. "The Optimist," his column for ForeignPolicy.com, runs weekly.

EZRA

1:31 AM ET

October 25, 2011

?

So, according to this theory, Britain was *more* secure in 1913 than in, say, 1850, because the united, economically strong Germany of 1913 was actually *less* likely to go to war against them, being so content and everything.

 

OSBEP

3:45 PM ET

October 25, 2011

??

I think your question mark is probably more appropriate if it's directed at your own comment.

First, the article did not purport to extend a blanket theory stating that one country is always more secure when other countries experience strong economic growth. It merely pointed out that in the past decade (not the past century) the growth of (many) other economies benefited both the US economy and our security (indirectly by decreasing instability in former failed states).

Second, Britain and Germany were involved in an increasingly aggressive power struggle throughout the 19th and early 20th centuries, along with the rest of Europe, as a result of repeated clashes resulting from their respective imperial expansions. They directly opposed each other geographically and economically. In contrast, we now have what is called a "global economy" in which economic ties between countries all over the world result in mutual benefit and decreased aggression.

If I may take a page from the most recent GOP primary debate, what you are trying to do is compare apples and oranges (except in this case the two things being compared ARE actually as different as apples and oranges).

 

EZRA

4:53 AM ET

October 26, 2011

???

"It merely pointed out that in the past decade (not the past century) the growth of (many) other economies benefited... our security (indirectly by decreasing instability in former failed states)."

Failed states are not a danger to the US. Strictly speaking, nothing is entirely without risk, but failed states are less dangerous than large, united, well-organized, economically and military strong states. An Afghanistan-type country may occasionally perpetrate some terrorist outrage, but such events do not affect the US's ability to control the world system. If the global economy brings stability to a few small weak nations, while allowing China to overmatch the US, I will consider that a very poor trade. The blind spot that prevents you from seeing this is your focus on the intentions of foreign states, rather than their capabilities. Intentions can change quickly, while capabilities change very slowly.

And don't you think it's premature to draw conclusions based on a single decade, when we have 3,000 years of recorded history to study? Insights gained from events within living memory (say, the Cold War) are now to be considered irrelevant, based on events of this decade that will probably be forgotten a few years from now. You remind me of you those people claiming the Libya intervention is setting some glorious new precedent, that "from now on" things will be different, as though no one can remember anything from before this year. If Qadaffi's death is supposed to put the fear of God into all those bad dictators out there, I wonder why Saddam's death was so ineffective in putting the fear of God into Qadaffi.

"Britain and Germany were involved in an increasingly aggressive power struggle throughout the 19th and early 20th centuries, along with the rest of Europe, as a result of repeated clashes resulting from their respective imperial expansions. "

So you are admitting that Britain did indeed become less secure as German economic-military strength increased, right? Just that this need not apply to every bilateral relationship? The Anglo-German conflicts were sui generis? Therefore lessons from them are not applicable to our present situation? But what are the conditions that make it unique? Why could the US and China *not* become involved in a similar power struggle in the 21st century? Because they don't have respective imperial ambitions? Sure.

"We now have what is called a "global economy" in which economic ties between countries all over the world result in mutual benefit and decreased aggression."

This is the "This time it's different" argument, and has been used by many people about many things, and rarely have the conditions of the past not re-asserted themselves eventually. It amounts to throwing a stone in the air and, while it ascends and until it reaches its apex, saying, "This time it won't come down." What exactly was it that changed to render war obsolete? Did you just say there's now international trade? So the fact that when Britain and Germany went to war in 1914, each was the other's largest trading partner, is quite irrelevant, eh? So human nature is now different, or humans are operating under magical new conditions, making a study of history useless?

As you probably know, there were a number of books published just before WW1 arguing this exact thesis, that interconnected economies prevent war. Something tells me very few such books were published in the 1920's. In each case the thesis stems from a reification error, or thinking that because a situation (i.e., peace) has continued for some time, there must be "something" causing it, and such arguments can usually find ancillary evidence that appears convincing as long as the conditions they are meant to explain prevail. But there need not be any cause. The same sequence of events might occur by chance. So the argument that our present period of peace is caused by a global economy (while relying on simple correlation without any proof of causation) can appear convincing as long as peace prevails, it will not look so convincing after the Great War of 2035.

 

OSBEP

3:54 PM ET

October 26, 2011

???? (to keep the order of responses straight)

Your response was reasoned and convincing in several respects. Overall, however, I still disagree with several of you basic arguments.

1. I DO actually think we find ourselves in a new period of time that renders many of the observed rules regarding foreign policy less useful than they once were for plotting our course in the treacherous waters of diplomacy. There have always been trading partners and interconnected economies - very true - but never before in history has there been such a pervasive and ubiquitous global economy. Never before has international investment been so easy and tied us so closely to such a geographically diverse set of countries. Beyond this we now have nuclear weapons and systems capable of deploying them across the globe within hours. I recognize that there is always room for a paradigm shift due to new technology (for instance cyber warfare or weapons systems that can neutralize ICBMs), but for now it would take an irrational actor (not a powerful, economically sound opponent state) to start an actual war. This leads me to refute two of your premises:
a. At this point in history and until a technological advance of the type described above occurs, failed states ARE our greatest threat, both physically as a country with borders and economically as global terrorism (fostered by failed states in which groups organize and recruit) has proved to have a destabilizing effect. War is, of course, not obselete. To say so would be to ignore the last decade completely. Global war, or even total war between two developed countries as in the example of England and Germany in the early 20th century (again, until technology shifts the "mutually assured destruction" rule) is obsolete. Limited skirmishes, targeted strikes, and civil wars are still, and will forever be around.
b. As mentioned above, I do think we can draw less upon the "3000 years of recorded history" then we once could, but I also agree with you that to base our future actions on a mere decade of data would also be unwise.

2. There is no denying that the rise of Germany in the early 1900's was detrimental to British security. If the last decade has shown every country on the planet one thing, it is that economic misfortune does not abide by geographical borders anymore. Germany and Britain were enormous trading partners, true. When they went to war it devastated Europe and its economy. Asia, the Americas, and Africa (other than those countries drawn into the conflict because of imperial holdings) were not affected economically other than decreased trade with those at war.

If China attacked us (or vice versa given some of the hawkish talk coming from the Right)then all of the US debt they have wisely invested in becomes worthless and the goods they buy from us as well as those we buy from them sit and rot at the docks. Not only that, but so does any investment made by any other country in either China or the US. War used to be profitable. A country used to gain more from it then it might have otherwise - a gamble because you obviously have to win but often a gamble that succeeded. This is no longer the case. China would lose far more in global ties and trade then it could ever hope to gain from total war with the US, even if it won. It would take decades for the global economy to return from a hit like that and the agressor would face the ire of countries that, in the past, would have sat out for a lack of interest. Everyone has a stake now.

3. Quick thoughts on your other points:
a. Libya. I'm mystified on this one as it wasn't in the article or mentioned in my response. My take is that uprisings such as this are unique because of how they came about (social networking) but will not result in anything spectacular or different for the region. Hopefully a little fairer and a touch more democratic. Also, if the fall of Qaddafi taught his friends in Seria or Yemen anything it's that to lose power now means death. Not really incentive to step down or change (maybe incentive to buy that tropical island off the coast of a non-extradition country that you've been eyeing though). So I think we agree there, although I'm a little hurt you lumped me in with the overly optimistic.
b. As mentioned above, the "Anglo-German conflicts" were not sui generis. I never said they were. Of course they stand in a long line of wars caused by many of the same factors in different times and places. The world is still a dangerous place and you are entirely correct when you point out that intentions can change quickly. Human nature will never change. I also agree that the unchecked growth of any one nation can create a dangerous imbalance in global power. However, what has changed are the consequences of all out war between countries and I think the current technological and economic assurances in place do keep total war from being a true threat to the US.

Finally, I will admit to being something of an optimist. I do not share the belief with some that the growth of China will inevitably lead to a clash with the US. I do not believe that as economic growth becomes increasingly dependant on foreign investment the US will fall into a post-superpower era depression and relinquish its crown to Asia. I do believe, however, that the basic premise of the article is correct: growth in many countries is good for the US.

 

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8:49 PM ET

October 25, 2011

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GINCHINCHILI

11:57 AM ET

November 19, 2011

Keep in mind U.S. Immigrants Account for 40 Million

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