A new report documenting economic growth, health, and education indicators of the countries of the world shows a rebound in economic growth following more than two decades of economic failure for the vast majority of low- and middle-income countries.
The report, “The Scorecard on Development 1960-2010: Closing the Gap?,” by Mark Weisbrot and Rebecca Ray, is the third in a series of such progress reports to be produced by the Center for Economic and Policy Research (CEPR) since 2001, when CEPR first documented the decades-long economic growth failure. The current report is updated with the latest numbers from the just-released April 2011 IMF World Economic Outlook database.
The long-term growth failure of 1980-2000, as well as its negative impact on major social indicators measuring health and education, was subject to very little investigation and barely reported in the media.
“It will be interesting to see how this rebound is interpreted, since the long-term growth decline went largely unnoticed,” said Mark Weisbrot, CEPR Co-Director and lead author of the report.
“Like the most recent world recession, the long-term growth failure of 1980-2000 was a result of policy mistakes; but these mistakes have hardly been examined,” he said.
The Scorecard reports have consistently noted that the long-term growth failure post-1980 has coincided with the widespread implementation of “neoliberal” reforms. Among these were tighter fiscal and monetary policies (including inflation-targeting regimes and increasing independence of central banks); a large reduction in tariffs and non-tariff barriers to trade; financial deregulation and increased opening to international capital flows; privatization of state-owned enterprises; increased protectionism in the area of intellectual property; and the general abandonment of state-led industrialization or development strategies.
The report divides the world’s countries into quintiles according to their level of per capita GDP, and by social indicators, at the beginning of each period (1960, 1980, and 2000). This methodology eliminates the effect of “diminishing returns” in growth or in progress on such indicators as life expectancy.
For all except the highest quintile, there is a sharp rebound in economic growth over the last decade, as compared to the prior 20 years. For most low- and middle-income countries, there is also a rebound in progress on social indicators including life expectancy, adult, child, and infant mortality, and education. Some low-income countries show worse life expectancy and mortality over the past decade due to the HIV/AIDS crisis, which has also hit women much harder than men in countries with high infection rates. However, the report notes that these outcomes are also a result not just of disease, but of health policy failure.
“It’s too early to tell whether the long economic decline of the post-1980 era, for most low-and-middle-income countries, has ended,” said Weisbrot.
The report considers a number of changes that may have contributed to the rebound: a reversal of prior policy mistakes (Brazil, Russia, Argentina, India); the reduced influence of the IMF and its associated lenders in many middle-income countries (Asia and Latin America); the increasing importance in the world economy of countries with less neoliberal policies, especially China, with a state-led economy; a period of relative financial stability and also bubble-growth (U.S., UK, Spain, Ireland, Eastern Europe) before the crash; the increase in commodity prices (Africa doubled its overall growth rate during the past decade); the accumulation of reserves in many countries that enabled them to avoid balance of payments crises or IMF lending; and recovery from the effects of past policy errors.
Weisbrot noted, “The decline of the IMF’s influence on policy in middle-income countries is one the most important changes in global economic governance to take place in the last three decades.”
“Ironically, it is the high-income countries that are now more constrained by neoliberal policies – for example, in the persistent high unemployment rates in much of Europe and in the U.S. – than the middle-income countries, as in the past,” said Weisbrot.
The April 2011 World Economic Outlook projects just 2.5 percent GDP growth for 2011-12 in the high-income economies, and 6.5 percent growth for emerging and developing economies.
Weisbrot will present the Scorecard’s findings at a public event in Washington, D.C. tomorrow morning, and will be joined by Jomo K. S., Assistant Secretary General for Economic Development in the United Nations’ Department of Economic and Social Affairs.