charliezap

South Africa Still Shines Among Emerging Markets

On Apr 29 09:24 PM cameroni wrote:

> You are right Mr Killinger,
>
> The resource rich countries are holding up better and they always
> will. And we (North American's) are blessed with a tremendous store
> of resource wealth that is not being exploited all that aggressively.

I think it is arguable whether "The resource rich countries are holding up better and they always will." I think it is also arguable whether North America has the resources, or whether we are willing to exploit them.

When my daughter was in college, she showed me a paper by an Oxford based economist who studied emerging market economies. Specifically, this paper drew a distinction between resource rich countries and those where the people were better educated. It turned out that most of the resource rich countries were in Africa, while the better educated were in Southeast Asia. It also turned out that the better educated countries did much better than the resource rich by such measures as GDP growth and GDP per capita.

What explains this? Well, for one thing, the resource rich became afflicted by something that economist call the "Dutch disease." Say a country suddenly discovers oil. A lot of the resources in the country are turned to developing the oil resources, and other sectors, such as agriculture, are neglected. A few people at the top and a few suppliers benefit from the oil, but most of the people do not. Prices go up because of the new demand from the oil fields and from the beneficiaries. Unless the government is very enlightened (most are not), government spending does not benefit people on the lower end, e.g., through better education. The net result is that the majority of people, the ones at the lower end of the scale, are actually worse off in real terms, because of inflation.

On the other hand, the better educated countries, lacking resources, were able to organize manufacturing industries that were competitive because of lower prevailing wage rates than developing countries. Think of Nigeria, versus say, Taiwan.

The moral of the story -- study hard and work hard and you will be better off than if oil was discovered in your midst. For the US, it means the payoff is in better education for all of our people, to compete in high tech, health care, and other scientific enterprises that increase productivity.

South Africa Still Shines Among Emerging Markets

On Apr 24 02:53 PM Gedankonomist wrote:

> If South Africa were not controlled by the SA Communist Party aka.
> ANC, it would not be an "emerging economy," it would still be a "first
> world economy."
>
> It was a "first world" country until 20 years ago the "world community"
> led by Reagan and the US put sanctions on the country. Yes, apartheid
> was bad, but (a) that is their business and (b) many Africans migrating
> from other African countries into SA did not seem to mind it as much
> as staying at home and starving because of some US-foreign aid propped-up
> dictator.
>
> If Americans could only realize how much misery and desperation their
> tax money creates around the world.

Gedankonomist: Before you comment you should get your facts straight.

1. The SA Communist party supports the ANC, but does not "control" it. In fact, the SACP's major complaint is that they have been ignored by policy makers at the head of the ANC. Back in 1994, Mandela did threaten to nationalize "the mines, the big companies, and the banks" but after the IMF and other Washington groups pointed out that such actions would chase away the new capital the country desperately needed for growth, the ANC quickly reversed course and adopted free market economic policies. As a result, GDP growth was humming along at near 5% until the recent US induced recession, whereas it was only around 1 to 2% in the last years of the strictures of apartheid.

2. Under apartheid, South Africa was a "first world economy" for just a tenth of its people.

3. Apartheid was not just bad, it was EVIL.

4. There is more migration from other African countries now than there ever was under apartheid. And most of these migrants come from neighboring Zimbabwe. Are you saying that the US has been secretly propping up the Mugabe regime? Numbers of migrants have come from Nigeria and Somalia. Is oil-rich Nigeria propped up with US government aid? And Somalia? Did you ever see the movie "Black Hawk Down"? There is no love lost between the US and Somalia. In what other African countries is the US "propping up dictators"?

5. As for foreign aid money, the US contributes less to Africa (as a percentage of GDP) than most European countries.

PS: Your pictures are from over 15 years ago, and have no relevance to today's South Africa.