Are all countries achieving economic progress?

Escrito el 17 Diciembre 2007 por Gonzalo Garland en Economía Mundial

The United Nations Development Programme (UNDP) includes in its yearly “Human Development Report” a table on Economic Performance. In its 2007/2008 edition it presents GDP per capita at Purchasing Power Parity for year 2005 (official numbers for 2006 are still being processed), and includes a column that shows in what year, between 1975 and 2005, the country achieved its highest PPP per capita income. Not surprisingly, most developed countries have had their maximum in the last recorded year, that is 2005. United States, Japan, Germany, France, Australia or Spain, to name some, all achieved their maximums in 2005. This is an indicator that even though progress may not be dramatic in many cases, there is a constant increase in per capita incomes as time passes. Among the more developed countries there are very few exceptions to this rule: Italy and Portugal both achieved maximum values in 2002. This same pattern is seen in Central and Eastern Europe, but not in Russia. Hungary, Poland, the Czech Republic, the Baltic states, and even Bulgaria, Romania or Albania, all saw their maximums in 2005. Russia, instead, had a maximum in 1989, and is therefore still recovering from the difficulties of the 90’s.

If we move to Asia, the pattern remains similar, which is good news for the world’s population. China, India, Indonesia, Thailand, Pakistan or Vietnam also achieved their maximum per capita levels in 2005, and therefore these countries can feel a general sense of progress as time passes. So does this mean that the entire world is going through a period of prosperity, and that said prosperity strengthens the belief in market economies as a source of progress? We cannot jump that easily to this conclusion. Latin America shows mixed results. On the one hand, Mexico, Chile, Costa Rica, Panama, Brazil, Colombia or Ecuador did achieve maximums in 2005. But others are still trying to catch up with a previous period: in Argentina and Uruguay it was 1998, in Paraguay and Peru it was 1981, in El Salvador it was 1978, and in Venezuela, Nicaragua and Bolivia it was 1977. So there are countries that are now trying to recover income levels that existed almost 30 years ago. Maybe it is not surprising that some of these countries are experimenting with heterodox economic policies, or maybe it is precisely these policies that make economic progress difficult, or both. In the case of Africa, we again see different patterns, but the overall picture is not bad. Several countries achieved their highest per capita incomes in 2005. Among them, Egypt, Algeria, Morocco, Senegal, Ethiopia, Tanzania, Uganda or Ghana. But again, others are still trying to recover some past maximum. Congo is still trying to recover a level achieved in 1984, South Africa in 1981, Nigeria in 1977, Zambia in 1976 and Madagascar in 1975. And finally oil exporting countries in the Middle East (but also in other regions as we saw with Venezuela and Nigeria) include countries that also have to see again the maximum levels that were achieved in the past. The United Arab Emirates achieved their maximum in 1981, Kuwait in 1979, Saudi Arabia in 1977 and Iran in 1976. In these cases the oil shocks of the 70s represented huge increases in per capita incomes that, despite high oil prices now, have not been recovered.
So overall the picture is mixed. Many regions and the majority of the world’s population, have seen increases in recent years, but there are others that have not. The ones that have not include oil exporting countries, some Latin American and African countries, Russia and some, but not all, of the republics that were part of the Soviet Union. But even in these cases just looking at the year when a maximum was achieved may be misleading. Maybe a country achieved a maximum in 1978, for example, and then per capita incomes fell but later recovered, in such a way that in 2005 the country is very near to recovering 1978’s per capita income levels. This situation is very different from that of a country of constantly decreasing per capita incomes since 1978. The table will give us some insights into which is the case in each country, but to discuss it would take up too much space. If you would like to look at the specific information look at Table 14 at http://hdr.undp.org/en/reports/global/hdr2007-2008/


Spanish Property Consultant 25 Febrero 2008 - 16:54

Very interesting! That the wealth in Europe and Asian countries is improving on a PPP basis is not very surprising as the economy for several years has been increasing more then the inflation. What is shocking is that there are countries where the population haven’t improved their buying power since 1977.

It will also be interesting to see what will happen in 2008 in countries like Spain where it seems like the inflation might increase more than the economy.

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