Rapid-Growth Markets Forecast: Winter 2013
Lessons learned from past development paths
Four key lessons can be learned from past development paths
As RGMs strive to continue upgrading their economies and increasing GDP per capita, there are a number of lessons to be learned from countries that have enjoyed sustained rapid growth in the past.
When examining the recent histories of countries which have enjoyed sustained rapid growth, four key lessons emerge.
Four key growth catalysts emerge:
- Political stability and strong leadership
- Stable and prudent macroeconomic policy
- High capital investment, particularly directed at infrastructure, education and health care
- Following an open and well-balanced trade policy and adapting it over time
Positive action in these four areas will lead to competitive advantage and offers countries the best route toward their shared ambition of rapid and sustainable growth.
For example, Korea's path to high income status since 1980 shows that trade liberalization is an important growth catalyst because it increases the level of competition industries face. This raises efficiency, spurs innovation and increases productivity growth.
Research and development spending
Source: World Bank.
All the RGMs have reduced tariff barriers over the last 20 years, opening their economies to trade and the sharing of knowledge. But policies toward trade have varied widely across regions. Analysis shows it is important to plot a careful balance between export promotion and import substitution.
In sub-Saharan Africa, political stability and stronger leadership have enabled some countries to move onto a much firmer footing and enjoy sustained rapid growth.
Efforts to achieve political stability and set a strong and stable macroeconomic policy have helped attract foreign direct investment (FDI) to some countries in the region.