The inexorable cycle of time keeps affecting the fortunes of nations at periodic intervals. Fluctuating fortunes of nations are closely linked with political history, geography, discoveries and inventions, battles, environment, and other connected factors.
The present world economic order is considered to have commenced in 1945, when the US and its capitalist allies quickly designated themselves as “developed economies”. Many US-based economists and the World Economic Situation and Prospects (WESP) took upon themselves the task of classifying all countries of the world into one of the three broad categories: developed economies, economies in transition and developing economies. Then, there are nearly 46 countries on the list of least developed countries (LDC). Other classifications include poorest countries of the world, those with the lowest gross domestic product (GDP) per capita.
Burundi is the poorest country in the world with a GDP per capita of $237, and 19 out of the 20 poorest countries are all located in Africa. Bhutan, which was classified by the UN as an LDC, retaliated by pointing out that it was the ‘happiest’ when measured by the unique gross national happiness (GNH) index that it uses to measure well-being. As a result, western economists have grudgingly accepted GNH as a vital factor in assessment protocols.
Niger, a landlocked African country, is classified as one of the poorest in the world but has two significant uranium mines. It provides 7.5 percent of the world a mining output of highest-grade uranium ore and was a leading supplier of uranium to the European Union, which paid a measly $56.25 per pound in July 2023 while the ruling price was $140 in 2007. Niger produced 2,020 tonnes of uranium in 2022, which was grabbed by the French at a throwaway price, so, no wonder that the country is wallowing in poverty while Europe splurged on cheap nuclear power to illuminate its cities and fuel industries, enjoy fabulous lifestyles and get ranked as “developed”. The current military coup in Niger will likely tick up uranium prices and get the people a reasonable and fair price.
In this system, developed and advertised by the western countries, those who exploited cunningly, profited and this led them to give themselves higher rankings while those who couldn’t decipher the sophisticated exploitation, struggled with poverty and rock-bottom rankings. Seismic policy shifts are needed to disrupt and redistribute wealth and power by way of revolutions, military coups or wars, for the old world order to collapse and a new world order to emerge and the process repeated ad infinitum.
What is most hilarious is that China – the world’s second largest economy; ranks in the top five countries for trade and foreign investment; has the world’s largest number of middle-class consumers; and provides an estimated $3 billion per year in foreign aid expenditures – is still classified as a “developing economy”, as per the most recent UN 2022 World Economic Situation and Prospects. Just a mere glance at the 16 “critical infrastructure sectors” classified by the US government’s Cybersecurity and Infrastructure Security Agency – chemicals; communications; critical manufacturing (metals, machinery, electrical, transportation); energy; food and agriculture; medical and pharmaceuticals; information technology – reveal heavy dependence on Chinese imports by the US, which has prompted President Joe Biden to issue an executive order dated February 24, 2021, to secure America’s critical supply chains. Beijing sees Washington’s unwillingness to acknowledge China as a global power with legitimate interests in international affairs, as a big deterrent.
Europe is in a similar predicament as the US. President of the European Commission, Ursula von der Leyen, in her speech delivered at Brussels on March 30, pointed out that Chinese President Xi Jinping wanted to make “China less dependent on the world and the world more dependent on China.”
A combination of surging energy costs and increasing imports from China has led to Europe’s first significant trade deficit in more than a decade. Another interesting aspect is that most western economies have become ‘military merchandise economies’, and are constantly innovating and upgrading military arsenal for sale to Third World countries at astronomical prices. To pep up sales, conflicts are created by intelligence agencies, which are hyperactive to foment discord and highly destructive weapons are sold, making many poor countries into war-ravaged zones.
Yet western economists are reluctant to coin the term ‘military merchandise economies” for these western economies. As some sort of a karmic retribution, refugees from war-ravaged zones are flooding the entire Europe, as also the US. The migration challenge is slowly but surely destroying Europe, dragging the economy to lower levels. A survey by Plan International UK found more than a third of girls aged 14 to 21 in the UK have struggled to afford or access menstrual products. This is equivalent to over one million girls. Half of those surveyed said they did not have enough money to buy period products at all, and around 73 percent had to use toilet paper as an alternative. It was estimated that more than 1,37,700 girls in the UK missed school in 2021 because they could not afford sanitary products.
Six percent of parents said they were so desperate to equip their daughters with menstrual products that they resorted to stealing. More than a fifth of parents said they had gone without eating themselves, so that they had enough money to meet their child’s needs. This is the situation in a developed country.
Migrants from a bewildering array of countries – Syria, Afghanistan, across Africa, the Middle East and Far East – have inundated Europe, whose ‘development goals’ are to take the European continent on a journey back in time to the 7th century.
The 7.8 percent GDP growth rate makes India the fastest growing major economy. Global agencies Nomura, Deutsche Bank, Morgan Stanley and Moody’s have raised India’s FY24 GDP forecast after strong growth in Q1. Compared to India’s 7.8 percent GDP growth rate, China’s economy grew 6.3 percent during the same quarter ending in June. India will surpass Germany in 2027 and Japan by 2029, at the current rate of growth, and become the world’s third largest economy – a movement of seven places up since 2014, when India was ranked 10th.
According to the Harvard Business Review, a report titled ‘Is India the world’s next great economic power?’ released on September 6, states: “By 2030, India’s working-age population is expected to be 1.04 billion with a dependency ratio to be the lowest in its history at 31.2 percent, contributing just under a quarter of the incremental global workforce. The working-age population bulge is expected to last till 2055. The ‘Asian Miracle’ was built on harnessing this trend: Japan entered this sweet spot in 1964, South Korea in 1967 and China in 1994. Additionally, India also has the largest pool of English-speaking STEM graduates in the world.”
Writing in Nikkei Asia, ‘India’s rise is beyond doubt’ dated February 7, columnist Richard Yetsenga opined: “But economic development has no standard recipe. The rise of the Asian Tigers – Hong Kong, Singapore, Taiwan and South Korea – was unique. China’s rise has been unique. So will India’s. Textbooks have to be rewritten after each such rise and likely will be again as India progresses.”
The two Asian neighbours, India and China, are starkly contrasting: while China is administered ruthlessly by dictator Xi Jinping, Prime Minister Narendra Modi is in an inflexible and chaotic democracy. Yet, despite all odds, the country is growing by leaps and bounds. According to a report dated July 11 by Goldman Sachs Research: “India is expected to overtake the US and become the world’s second-largest economy by 2075.”
Maybe the target date is quite distant and the world lives in uncertain times, yet India is headed in that direction. The people of India should not forget that just a few years back, in 2012-13, the Indian economy was performing poorly and economists were toying with the idea of replacing India by Indonesia in BRICS (BRICS is a grouping of the world economies of Brazil, Russia, India, China and South Africa). The dynamic leadership of Prime Minister Modi has made a remarkable turnaround, compelling even the World Bank to laud India’s progress under his leadership ahead of the G20 Leaders Summit underway in New Delhi.
The 2024 Lok Sabha elections will decide if the people of India want to keep soaring upwards or take a U-turn and return to stagnation and poverty. That apart, the moot question is: when will the western economists see the two galloping horses on the horizon, China and India? Has the time not come to rewrite terms like “developed” and “developing”, and replace them with “disintegrating economies” and “galloping economies”?
(The writer is a retired officer of the IRS and the former director-general of the National Academy of Customs, Indirect Taxes & Narcotics. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect News18’s views)
