How do you know if the economic gap between rich and poor nations is getting wider?
Dream Angel asked:
Globalization is making the gap between rich and poor nations wider, hence alternative strategies such as ethical trade fair trade will not work in the interest of developing countries. Why is this so?
NATHANIEL
Globalization is making the gap between rich and poor nations wider, hence alternative strategies such as ethical trade fair trade will not work in the interest of developing countries. Why is this so?
NATHANIEL
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May 1st, 2009 at 11:49 am
VIRGIE
the lorenz curve
May 4th, 2009 at 1:21 am
XAVIER
It is not so. You only have to look at the growth of China and India in recent years to see that in poor countries are growing faster than rich ones and closing the gap. South Korea is a real success story also. Only in parts of Africa and a few scatter countries is the gap growing.
May 7th, 2009 at 2:49 am
MORTON
The economic answer requested is more complicated than the question itself or the answers given so far suggest.
We could correct these misleading generalizations and avoid politics by getting specific.
For example, China has been the fastest growing country in the world for 2 decades. It is definitely catching up the rich countries, and it has benefited from its high savings rate, its low currency, adaptation of technology, its cooperation and trade with the world that allow it to be the world’s leading manufacturer of light-weight manufactured goods. Now days most countries buy many things more affordably by importing them from China and that gives many former Chinese Farmers more steady work.
Meanwhile, countries such as Zimbabwe and Somalia in Africa or Bolivia and Ecuador in Latin America are falling behind the developed countries. In part this is because of their low savings rates, prehistoric economic policies, low adaptation of technology, political instability, and reliance on basic comodities for income, and a lack of nvestments.
The best way to tell which countries are growing enough to close the economic gap is to track their economic growth rates by measuring their GDP growth rates. China has been growing in the double figures as a percentage of GDP. India ahs been growing near double figures for more than just a few years. European, Japanese, and US economies have trended around 1-4% growth rates the last couple of decades. Much of Africa and Latin America failed to grow durnig the 80’s at all and after many economic crisis have edged up their average growth rates with varying success.
At the same time, you also have to read and consider if the given country is relying on commodity exports such as oil (like Ecuador does) and benefits from temporary rises in commodity prices. Argentina, for example, has been greatly benefiting of late from growth in their soybean exports by exporting to China.
Commodities, unfotunately for these countries, are not a good way to grow as their shot term moves up and down trend in the long run towards slight declines over the centuries (in commodity prices).
More than trade, a country needs a high savings rate, modern investment policies, adaptation of technology, and political stability.