Category Archives: Charts
In the years since the financial crisis broke upon the high-income countries, the economic performance of the biggest emerging countries has been remarkable. One of the reasons for this success has been the high degree of fiscal and monetary firepower available to boost demand, making up for shortfalls elsewhere.
Although emerging markets as a whole continue to have substantial room to maneuver, this is not universally true. Some governments are in a much better position than others. And there is a real risk that if another economic shock occurs (because of an oil-price jump – perhaps following conflict in the Gulf – or a collapse of the eurozone), those without the wiggle-room to respond will be vulnerable. (more…)
This chart (courtesy of the Economist) shows the strong correlation between corruptiuon and human development. Transparency International’s annual Corruption Perceptions Index (CPI) measures the perceived levels of public-sector graft by aggregating independent surveys from across the globe. The United Nations’ Human Development Index (HDI) measures a combination of health, wealth, and education.
Although there is a broad correlation between the two indicators, the relationship is not a simple one across the whole spectrum of countries. Instead, there appears to be three categories of development levels:
- At the bottom, there is mainly failed states, very poor countries, and places where governments have a history of excessive intervention in the economy (Turkmenistan, Venezuela, Cuba).
- At the top, there is the richest countries in the world, including most of the OECD and places such as Singapore, Hong Kong, Barbados, Bahamas and Qatar.
- When the corruption index is between approximately 2.0 and 4.0 there appears to be little relationship with the human development index.
The above suggests that:
- Reducing corruption when it is above a certain abysmal level has substantial payoffs.
- Once this level has been crossed, however, countries can make substantial development progress even with relatively high levels of corruption (meaning an excessive focus on the issue may be counterproductive at times).
- Once countries are somewhat developed (putting them at around higher middle income level status), reducing corruption again becomes critical; states rarely become wealthy with mediocre institutions.
Cross-posted from Global Dashboard.
Southeast Asia has consistently outperformed Sub-Saharan Africa in income growth. As the below chart indicates, its inhabitants were much poorer than Africans in 1960; today they are two and one-half times richer. In fact, over the past half-century, the region has been the most consistently successful in the developing world, growing almost continuously (apart from a brief hiatus after the 1997 Asian financial crisis).
This chart (based on an index produced by the Economist Intelligence Unit and the Nuclear Threat Initiative) highlights why people working on security issues worry about fragile states. As the New York Times reports,
Experts warned that terrorists could buy or steal the makings for nuclear arms from the world’s secretive maze of atomic storage and production sites, which are said to number in the thousands. . . .
The report said nearly a quarter of the nations with materials that can fuel atom bombs scored poorly on social factors because of “very high levels of corruption.” And it warned that several of those “also scored poorly on the prospect of political instability over the next two years.”
That bleak combination, the study concluded, “significantly increases the risk that nuclear materials might be stolen, with help from corrupt insiders or in the midst of government distraction or political chaos.”
Fragile states can be good places to invest in. Of course, you have to choose the country and the method wisely. But given the dearth of competition and sometimes very rapid (if not very consistent) growth, opportunities abound. Although I would not mortgage the house for most of the below (except maybe Mongolia), it is interesting to note that most of the countries forecast to grow the fastest (by the Economist Intelligence Unit) in 2012 are fragile states. In contrast, most of the fastest shrinkers are well developed places in Europe.
Even though we have watched it in front of our eyes, it still seems hard to fathom:
Between 2007 and 2012, the Chinese economy will expand by close to 60 per cent. Emerging Asia as a whole will grow by almost 50 per cent. Over the same period, economies of high-income countries will grow by a mere 3 per cent. Who can doubt that the world is undergoing a profound transformation?
I am a little more pessimistic about the long-term growth prospects of emerging markets than PwC, but the below chart (a year old via the Guardian) certainly shows where the world is going: