By: David McDonald
OVERVIEW
One’s definition of what rapid expansion looks like can vary, but for the sake of this article, I’m going to say that growth of 5% and more over any extended period can be considered rapid. I’ll set the limit at say, 30 years.
When I think of all the countries that have experienced rapid economic growth in history, South Korea was the first thing that popped in my head, next to Dubai, of course, but I’ll touch on Korea first.
Under pressure to maintain social stability and with impetus from the US government, the Korean government implemented land reforms in the period of 1945 – 1948 that took land from the elites and distributed it to the peasants who worked the land. As a result of this land reform, agricultural production increased to such an extent that it produced immense surpluses.
These surpluses were invested in low-value manufacturing, such as making toys and clothes. Over several decades through the process of learning by doing and step by step upgrading to higher value industries, the South Koreans eventually started manufacturing things like steel, cars, and electronics, Asian markets and the rest of the world.through and exporting them
The government created an environment where only firms that created goods that would be competitive worldwide could survive. They did this by making financing much cheaper for firms that met export performance metrics, along with other incentives that made costs much lower for these firms. So Korean firms that could not make products that could compete with the likes of Sony and Toyota could not survive against firms that could.
South Korea has advanced tremendously since the introduction of land reforms in the mid 40’s and has seen steady 5% growth since the 2009 recession.
Eventually under these pressures firms like Samsung and Hyundai emerged as strong world beaters and brought in tremendous wealth to the country. Korea in the 50s was one of the poorest in the world and completely ravaged by war, and today it is one of the richest.
The United Arab Emirates
The UAE went from a backwater extremely poor nation to among the richest on earth in a span of about 30 years.
Most people think that the United Arab Emirates and Dubai in specific, became rich due to it being a part of the Gulf – the oil well of the world – but the major part of around a $100 billion revenue of the state comes from prosperous areas like real estate, airlines, and ports. Oil comprises only seven percent of the total revenue whereas the rest of the income comes from heavy investments in industries and land. A host of infrastructure projects, including extending the Dubai Metro to the Expo 2020 site and expanding surrounding roads, have been given the go-ahead by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai.
Mattar Mohammed Al Tayer, RTA Director, briefed Sheikh Mohammed on the projects designed to deal with increased passenger traffic, projected to reach 95 million at its peak.
The UAE has seen many fluctuations in GDP growth over the past two decades, but the largest, and most rapid expansion occurred after the 2009 financial crisis. You can expect the nation to enter an expansionary period in the coming years due to new infrastructure investments.
The reason behind the progressive development of the state can be due to the western methods that have been adopted by Dubai rulers. In the early 1980’s, it was understood that Dubai would not be able to last long in the competitive race if the focus was only given to oil resources.
Thus foundations were laid for investments in real estate that are now the major backbone of the Arab economy. In the year 2000, the majority of property development started taking place in the vicinity. This gave a fresh impetus to the economy and literally led to a boom.
Israel
May I throw Israel into the mix here? Regardless of politics, the country was very poor from its founding in 1948, had to absorb a few million Holocaust survivors and Jews expelled from Arab countries in the 1950’s (twice their population if I recall), and their economy was rubbish until the 1990’s.
Israel may be the most rapidly-expanding economy on this list, if we’re evaluating GDP growth in the short run. We have reason to believe that the Israeli economy will soon enter an expansionary phase of economic development
Israel got a massive boost starting in the 1980s from a brain drain of Jews emigrating from the USSR. They were typically well-educated higher-end specialists (think doctors, scientists, engineers) that didn’t want to live in the somewhat anti-semitic Russia.
Early help came from foreign Jewish donations, while later on an improved currency and plenty of immigrant manpower made this country crack the top 35 economies. A desire to “settle the land” probably helped also.
After outlining Israel’s economic achievements of the past 20 years, its GDP growth, its foreign reserves, shrinking debt to GDP ratio, declining unemployment rate, increase in labor force participation, Reuter goes on to state its advantages looking forward.
First up is Israel’s “enormous demographic advantage.” The OECD member states have an average median age of 42 while Israel’s median age is 31, the lowest by far of the organization’s 34 member states. In the crucial 20-34 age group the OECD is set for a “dramatic” 14 percent drop, Reuter notes, while Israel is headed for a 28% gain. He dismisses the counter-claim that the Israel of the future will be dominated by its two poor sectors, Arabs and ultra-Orthodox, pointing to declining birth rates among those demographics – alongside rising secular birthrates and a steady stream of immigration – and to their increased participation in the workforce and desire for education.
“It isn’t necessarily going to be great here, but things will be bad in the OECD,” says Reuter. “Everything is relative, growth is relative, unemployment is relative, everything is relative.”
Other areas where Israel has an edge, says Reuter, are its technological advantage – Israel is among the only eight countries that launch satellites into space; Israel is the world leader in R&D employees per capita and first in business expenditure on R&D, first in cyber security and second in scientific research to name a few. Then comes Israel’s global edge – its export oriented focus; generations of immigrants from around the world with their knowledge of cultures and languages and global networks of connections.
Japan
Japan’s industrialization in the late 19th century was nothing short of extraordinary. They went from an essentially feudal society to a modern imperial power within the span of one generation. (well, probably closer to two, but still very fast!)
Just like Israel, it is easy to see just from a simple GDP growth rate chart that Japan’s economy is functioning extremely well, is very stable, and can recovery from recessions quickly. Every up and down refers to a shift in the government’s fiscal policy and the central bank’s monetary policy objectives. After the 2009 recession, the government and banking systems in Japan worked together to carefully execute an expansionary economic policy and is why they were able to grow so rapidly.
Japan copied a lot of Western technology and customs, but it’s unclear as to which directly contributed to this breakneck advancement, and how much of it was pure determination by the Japanese.
Japan’s post-WWII economic miracle is also very noteworthy. Again, they went from post-war devastation to manufacturing juggernaut again over the span of a single generation.
The US played a key role in this economic miracle. The US supported an undervalued yen which in turn led to an explosion in Japanese exports. The dedication to quality within Japanese companies must not be underestimated either. From the mid 1960s until the bubble burst in the 1990s, ‘made in Japan’ meant quality and craftsmanship.
Other Notable Rapid Developers
Myanmar is the world’s fastest-growing economy, according to the IMF’s latest World Economic Outlook. The country’s GDP is projected to grow by 8.6% this year.
Political and economic reforms, which have made headlines around the world, have supported this economic growth. Increased consumer and investor confidence, and rising exports, have boosted the economy, argues the World Bank. However, inequality and poverty remain a significant problem across the country.
This is true for many of the world’s fast-expanding economies, which are typically not the biggest or most developed.
This map from the IMF explores the situation around the world. It highlights the rapid growth being experienced across much of Asia and Africa. The Ivory Coast follows Myanmar in second place, with projected GDP growth of 8.5% this year. Third on the list is Bhutan, with 8.4%.
Other countries predicted to return high growth figures include India, Laos and Tanzania. An interactive version of the map, showing growth from 1980 to 2021 can be found online.