Growth

Kazakhstan is known as the homeland of Sasha Baron Cohen’s fictional character Borat, and many people are unaware it is a real place. But it is a vast and sparsely populated country, a million square miles (2.7m square kilometers), nearly twice the size of Alaska or seven times as big as California, with only 17m people. It is the largest landlocked country in the world. Since the break-up of the Soviet Union Kazakhstan has done far better economically than most of the other former Soviet republics. Average annual growth of 7.4% since 2000 has lifted per capita GDP from a little over $1,200 to nearly $14,000. This performance owes more to the discovery and development of huge onshore and offshore petroleum deposits in the Caspian region than to fundamental reforms, but Kazakhstan has made some important improvements to its investment climate, to the point where it now ranks 76th out of 189 countries in the World Bank’s annual Doing Business report and 50th in the World Economic Forum’s competitiveness index.

The so-called “middle income trap” is a widely observed pattern, which sees poor countries advancing rapidly to middle income status and then failing to graduate to the ranks of upper-income countries.  A few countries have made this leap in spectacular fashion. Singapore, a small, poor country with fairly dim prospects when it was kicked out of the Malaysian Federation in 1965, is now richer in per capita terms than the United States and Canada. Hong Kong beats out Japan and Italy. South Korea, which in 1960 had lower per capita income than Ghana, is now 20 times richer than Ghana and also wealthier than Saudi Arabia. Taiwan has a higher per capita GDP than Greece and Portugal.

But many other countries, having reached middle-income status, see growth rates decline so that the threshold between upper-middle and high income remains tantalizingly out of reach. Malaysia, Thailand, Brazil, China, Bulgaria, Romania, Mexico, Colombia, and Peru – along with Kazakhstan – may all be at risk of languishing in the middle-income ranks. [click to continue…]

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AskyI recently joined a new frequent flyer program, which is not something I expected to do. I am already a member of several, covering each of the three major airline alliances, and I thought I was pretty well set. But as I sat in the departure lounge in Lomé, the capital of the West African nation of Togo, waiting to board a flight to Abidjan, Ivory Coast, a pretty young lady in company livery invited me to join the ASky Club. ASky is a new, mostly private, airline that serves a substantial West and Central African route network, operating Boeing 737 and Bombardier Dash-8 aircraft. It is affiliated with Ethiopian Airlines, which offers connections to North and South America, Europe, and Asia.  [click to continue…]

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About 10 days ago I sat at breakfast  in Lomé, the capital of Togo, a sliver of a country in West Africa, watching French TV news of the capture, and what turned out to be false reports of the liberation, of seven French tourists in northern Cameroon by the Nigerian radical Islamist group Boko Haram. It was hard not to feel concerned about the future of this part of the world. Lomé is a good 800 miles as the crow flies from where this most recent drama occurred – and a similar distance from northern Mali, where fierce fighting continues for control of the city of Gao – and I was in far more danger there from motorcycles going the wrong way down one-way streets than from terrorist kidnappers. But the fairly recent emergence of economic dynamism in much of Africa after decades of stagnation due to poor governance and political and ethnic strife remains fragile, and these developments highlight the risk. [click to continue…]

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Eurasia Group founder and emerging markets guru Ian Bremmer has come around to the view that the BRICS construct is nothing more than a bunch of countries “united by a catchy acronym” and little else. His op-ed piece in last Friday’s New York Times  notes that Brazil, Russia, India, and China “have formalized their club and extended their reach by inviting South Africa to join” – a development that occurred in December of 2010 and asks, “But do their meetings and joint statements really allow them to punch above their individual weight? What do these countries share beyond a common interest in bolstering their global clout?” Several hundred words later he concludes that these five countries “will sometimes use their collective weight to obstruct U.S. and European plans. But the BRICs have too little in common abroad and too much at stake at home to play a single coherent role on the global stage.” Has he been reading my blog? [click to continue…]

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It must come as some reassurance to Mitt Romney that he is not the only would-be President who says remarkably silly things while visiting foreign lands. Last month Hillary Clinton, on a tour of sub-Saharan Africa, delivered a speech in Senegal in which she said that the United States would stand up for democracy and universal human rights “even when it might be easier or more profitable to look the other way, to keep the resources flowing.” In a barely veiled dig at China, she added, “Not every partner makes that choice, but we do and we will.”

China is widely seen as engaging in an aggressive grab for Africa’s energy and mineral wealth in ways many African leaders find irresistible. Unlike the United States and multilateral institutions such as the World Bank, in which the U.S. has a dominant position, the Chinese offer money and technical assistance without attaching bothersome conditions on human rights, democracy, and free markets. [click to continue…]

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