The Secrets of High Growth Economies
What factors differentiate fast-growing national economies from the rest of the world? A new article in the World Bank’s Finance & Development magazine examines 13 national economies that have succeeded in growing at an average annual rate exceeding seven percent for at least 25 straight years. That’s a pretty high standard that few countries can achieve. The list includes a diverse mix such as Botswana, Brazil, Oman, Singapore, and Thailand. According to the research, these countries all share five characteristics:
future-oriented economic policies;
strong political and business leadership; and,
the use of the market as the primary resource allocation mechanism.
Not all of the 13 countries have succeeded in moving from middle income nations to high income nations. In fact, only six—Hong Kong, Japan, Korea, Malta, Singapore, and Taiwan—have engineered this shift. They succeeded because their leaders anticipated leading economic shifts and changed policies accordingly. For instance, all of these economies shifted their manufacturing focus toward more knowledge intensive industries. At the same time, they were willing to jettison older policies, even if they were successful. For example, the successful economies did not seek to stop the out-migration of low cost manufacturing facilities.
“The Ingredients of Sustained High Growth,” by Natalie Ramirez-Djumena and Jair Rodriguez appears in the December 2008 issue of Finance & Development.