DEVELOPMENT: U.N. Predicts Continued High Growth for Asian Economies

By Thalif Deen Reprint | | Print |

Thalif Deen

UNITED NATIONS, Jun 28 1995 (IPS) - The United Nations predicts that Third World economies will continue to grow by about five percent annually through 1996 and for the fifth successive year.

“This is indeed an important trend, especially set against the 1980s’ average growth of 3.0 percent a year,” according to the 1995 World Economic and Social Survey released here Wednesday.

Barry Herman, one of the study’s authors, told IPS that, as in past years, the rapidly growing Third World economies are heavily concentrated in just one region: Asia.

Asked why Asia continues to be a major Third World success story, Herman cited several factors, including high rates of savings, growing investments by the private sector and booming intra-regional trade.

The Asian region is also expected to benefit from the rise of the yen, he said, because the bloated currency makes it more difficult for Japanese firms to export.

Asked how many of these Asian countries can be regarded as “industrial countries,” Herman said it was both a political and economic question because “there is no hard and fast rule.”

South Korea, he said, had already applied for membership in the 25-member club of industrial nations, the Organisation of Economic Cooperation and Development (OECD).

But Mexico, which joined the OECD last year, would not declare itself an “industrial nation,” he added.

The United Nations says the highest Third World growth rates for 1995 will come from 15 developing countries.

The 15 vibrant economies are: China, Vietnam, Singapore, Thailand, Malaysia, South Korea, Indonesia, Taiwan, Papua New Guinea, Myanmar, Sri Lanka, Tunisia, Uganda, India and the Philippines, in descending order.

Their forecast growth ranges from ten to 5.8 percent, compared with a world economy which has been growing at the rate of about three percent annually.

Gus Speth, the Administrator of the U.N. Development Programme (UNDP), said recently there is a “widely held myth” the developing world is on the upswing because of the remarkable economic performance of East Asia.

But this is not true, he said, because 47 of the least developed countries (LDCs) in the developing world are fighting a losing battle for survival.

The high-performing East Asian economies — including South Korea, Taiwan, Malaysia, Hong Kong, Singapore and China — registered average per capita income growth of about 5.5 percent per year between 1965 and 1990.

But Speth said this does not mean “the developing world is doing pretty well, and that things are basically on track”.

With 10 percent of the world’s population, Speth said, the 47 LDCs earn only 0.1 percent of the world’s income. And for over two decades, their per capita income has declined, on average.

The LDCs’ share of world trade has also declined: from 0.6 percent in 1980 to 0.2 percent in 1992.

“These facts, and others, should shock us. And must continue to shock us,” Speth said.

The U.N. survey admits that “unfortunately, not all countries grow by five percent a year.”

“The statistic is a weighted average that aggregates the developing countries in such a manner that the results correspond to what it would be if the developing countries were one country,” the report points out.

Although Asia is far ahead of other regions, the U.N. study says that Latin America and the Caribbean and Africa are expected to make modest gains in 1995.

Herman said the financial crisis in Mexico, where the peso has lost about 40 of its value since last year, has hurt the rest of Latin America and the Caribbean.

“Investors began to reassess the region, but hopefully, this will be a short term problem.”

In 1994, Latin America and the Caribbean had their fastest economic growth in at least a decade.

But the United Nations predicts that in 1995 this region will have one of the slowest growth rates.

“The change results mostly from the sudden turnaround in Mexico and Argentina, which are shifting from growth in 1994 to stagnation and contraction in 1995,” the survey adds.

The region that needs the most help, says Herman, is Africa. Growth in Africa in 1995 is expected to reach its highest rate in six years, matching the population growth for the first time in as many years.

Africa’s economic growth is expected to rise from 2.1 percent in 1994 to 3.5 percent in 1995.

The region’s population growth has gravitated around 3.0 percent annually, the highest in the world.

The U.N. survey also says that by 1996, the transition economies of Eastern Europe and the former Soviet Union will enter their first year of overall economic growth since the collapse of communism. The turnaround to positive growth may already have been reached by this year, it said.

And the developed market economies, which account for almost three fourths of world output, have emerged from the recessionary period of the early 1990s.