Third World economy continues to remain as heterogeneous in nature as it has been since the middle of twentieth century. The good news is that most economies are experiencing a positive growth pattern, and becoming better off, even though population growth often dilutes that effect. With a large reserve for future demographic dividend, some of the poorest economies of Asia and Africa are bound for better days. However, uncertainties and new challenges are also appearing on the horizon.
For the third world economy, 2018 seems to be a time of hope, anxiety and despair at the same time. On one hand, the success of many third world countries in Asia have given rise to the hope that the day there would no third world may not be very far. On the other hand, continued pockets of mass poverty, disasters and conflicts in certain parts of the third world at times make one wonder if there is something drastically wrong with it. The state of the third world countries is not uniformly good or bad. It is spread over a spectrum that ranges from relative success to relative despair, seemingly bound together by a common thread of uncertainty about the future.
In many ways, the global economy is finally coming out of the slump that was precipitated with the economic crisis in the last decade. As developed economies regain their growth momentum once again, one would normally expect a better future for the economies following them as well.
However, there are also several dark clouds on the horizon that make this prospect a highly suspect one. Ironically, to some extent, it is technology, which has been instrumental in global economic development since the advent of industrialization, that is posing one of the greatest threats to the future prospects of third world.
The global economy saw an upward trend during the first few years of the twenty first century, before it gave way to the vagaries of the global economic crisis. Some may consider it as part of the normal business cycle. Others may not agree. One can agree, though, that the events during these years have added to our experience in dealing with human development and hopefully that may help as we go forward. Whatever happens in the next couple of years can have a significant bearing on the trajectory followed by the third world in its long term growth aspirations.
Today, the third world economy includes some of the fastest growing regions, and yet, large parts of the third world continue to remain in the clutches of poverty, hunger, malnutrition and misery!
China, with over 1.3 billion people is a semi-continent in itself. If one wants to look for statistical indicators reflecting a miracle, growth indicators of China are the place to look for. Never before, in the history of the world have so many millions of poor crossed over to the line of affluence as happened in China during the last two decades. Yet, in China, the job is far from done. While certain sections of urban population, riding on the massive influx of foreign investment, have earned significant wealth, large chunks of population still live in deprived conditions, and pulling them out of poverty still remains a challenge. Another challenge that not only China, but the whole world seems to be preparing for is its ageing population. With one child policy, China has already reaped its demographic dividend. What will follow in another two decades are repercussions of ageing, along with its costs and consequences. New challenges can arise, if China ends up becoming old before it becomes rich!
Between post war years of 1950s and the current point of time, a lot has changed. There are several examples of underdeveloped countries, who are no more considered third world today. These include Singapore, South Korea and Taiwan, but many other East Asian countries have also successfully followed on their path. Malaysia and Thailand, which were affected badly by the Asian financial crisis in 1997-98 have by now recovered more than enough and today, are no longer considered part of the third world. Indonesia and Vietnam have also made significant economic progress are in the process of becoming new tigers of East Asia. In fact, South East Asia could be hailed as the fastest growing region of the third world during the last half a century or so, and much of its no more falls in what can be described as the third world.
Latin America, with the exception of Mexico, continues to promise more than it delivers. This region had aroused immense possibilities of development in the 1980s as well as 1990s, but somehow, was never able to sustain its promise for high growth that would have propelled it towards developing world. Unfortunately, it has suffered one crisis or another every decade, and the global economic crisis of last decade did not make things easier for the regional economic well being. However, one favorable factor with this region is that they have already reached a certain level of development, from where even a relatively lower economic growth rate adds a lot of wealth for the people. Keeping that in mind, the current economic status of the region may not be a cause of concern.
Eastern Europe is one area, which once resisted the market driven economic growth model, before it was gradually assimilated in the now unified European economy. Unfortunately, for the region, the last decade has been one of turbulence for the global economy and the European economy has suffered more in relative terms. While some of the other economies that suffered more during the economic crisis in the last decade have relatively repaired their damage, Europe still seems to be struggling to regain its pre-eminent status. This may partly be due to its inherent weakness resulting from a monetary union without fiscal consolidation. The consequences of this dichotomy keep hindering its economic unification, giving the governments of the region a very strong lever with which to protect their sovereignties at the cost of regional welfare and progress. In most parts of Eastern Europe, the economic prospects are not much better compared to the beginning of this decade. There is also a definite progress towards the mean European standards, however there is still some way to go before that goal can be achieved.
During the last few years, the growth rate of Indian economy has been next only to China. Yet the country continues to suffer from several major challenges, both on the economic and political front. While the number of billionaires in India keeps jumping and has already reached a peak in Asia, the lot of most of its population remains unaffected, and so does its infrastructure, public amenities and life quality indices like literacy rate, which are one of the worst and match the Sub-Saharan Africa. Problems like naxalism, public protests, anger against establishment have threatened to become endemic, which is not good news as they can impede the economic progress.
Other countries of South Asia have also shown growth acceleration, but their progress has been impeded by violence, terrorism and civil strife. Lately however, things seem to be working out. Bangladesh leads the pack with best progress in the region, and even better results when it comes to human development indices, something that should not come as a surprise given its urban character and the strong cultural tradition of women empowerment, which is finally growing out of the clutches of religious fanatics.
A large part of Africa still continues to remain in the perils of human tragedy and poor economic progress, but not without many bright silver lines. Part of it, like Sudan has also suffered because of internal conflicts, and though the birth of a new country promised to restore normal trajectory of human development after years of genocide and violence, it is still a long way to go. However, most sub-Saharan Africa is languishing with growth rates which are not enough to pull it out of poverty and human misery. The degree of poverty and hunger remain a prevalent characteristic, but human development indices as brought out by the Human Development Reports give a lot of hope. In spite of its continuing miseries, the region has also shown some of the fastest growth in human development indices. Though growing population prevents the absolute number of suffering poor from coming down, yet, the indications are not bad, and if given a proper helping hand by the developed world, Africa has the greatest potential to become a showcase of human development in the decades to come.
While, there is a lot to cheer about in the global economy today, there are a lot of worrying signs as well. The foremost of them is the rising level of inequity almost everywhere on the planet. Several recent reports have highlighted that most of the economic growth during the last two decades has been cornered disproportionately be selective few. Indeed, the number of billionaires seems to be growing faster than the reduction in the number below the poverty line, and the economies worst hit by this phenomenon are is the developing world. Many of them have shown little interest in contributing to their parent economy, and many have readily moved to the developed world with their assets, leaving the country that made them rich high and dry.
Another big challenge that is raising its monster head at the horizons is the likely adverse impact of technological innovations like artificial intelligence, which can human workers obsolete. Apart from the fact that it will leave millions jobless, it is likely to worsen the already great inequity. Developing countries, with a larger dependence on labor and traditional shortages of capital and technology may be worse hit by such developments. If this does happen, it will pose an immense challenge for the developing world.
Overall, the third world in 2018 is full of variations in growth rates, has displayed accelerated improvement of its economy during last decade or so, but is still far from being in a satisfactory state. Last decade or so have seen significant growth taking place in many parts, but the developments are distributed unevenly.
The signs are not bad. Yet, there can be many a slip between the cup and the lip! One needs to watch out for the developments in respect to growing inequity and technological impact on employment.
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