Love the series! It looks like southeast asia, India, and Bangladesh (conditioned it can be stable again) is the next round of fast growth. That's still over 1B people to leave poverty so that's great.
I'm Ghanaian and love your summary. But just to add, Ghana, and most of Africa basically had fast growth from 2000-2014 because of high commodity prices due to China. Since then it's been stagnate growth for most African countries save Cape Verde, Ivory Coast, and a few others.
I've made a couple series on the history of some African countries (from pre-colonial, colonial, and modern day economics & geopol) for reading/audio. Here's 3 I recently did:
ETA: as a private direct investment operator w non-trivial developing markets experience I do recommend Yaw's links. I can quibble - one can always quibble, but quite well done.
Read the linked Tunisia. Knowing this case well I would suggest a major miss is the Tunisian post-REvolution lack of reform of their equivalent of the Indian License Raj - sarcastically for Tunisia refered to in French as the Kingdom of Licenses (agréments) -- business licenses and permits you need to move a pinky finger in business.
The Ben Ali regime gradually developed an extremely extensive liscense raj which served the Family and related gov and non-gov actors well to extract rents, in the case of his wife's family ownership / revenue participations in a wide network of activities - and in return for that you got whatever permit / license needed. Stifling of course for economic activity, stifling for entrepreneurship (or maybe better, since the State was promoting it, stifling of enterepreneurship that was independent and not willing to get eaten up).
Ennahda and the secular civil society post-Revolution got almost entirely caught up in the socio-cultural fights and debates and philosophising and really virtually nothing was done in terms of reforming the Tunisian liscence raj - and so the predictable stultifying (at least The Family was a source of a certain kind of "fluidity") - and the communist (really actual Cap C) oriented public sector unions obviously dominated lacking anyone to counterweigh them given a segment of private operators discredited by Benali collaboration (not necessarily willingly at all) while the opposition ended up nearly purely focused on fighting Culture Wars rather than asking themselves, how do we deliver on economic growth. (except of course in superficial ways)
Examination of this lack of reform helps understand the Kais emergence as well as his levers on power - besides the obvious ones that tend to get reported in the press insfoar as Tunisian journalists tend to universally be somewhat econ+business innumerate and blind to this.
Thanks for that, I can add that in the article I shared in part 5. I mentioned more about Ben Ali's sluggish bureaucracy in part 4, but i really like the causal link you just described about the lack of reform to Tunisia's "license Raj". Thanks!
yes indeed I read that, so was really in mode of giving extra refining. You do hint / slightly touch on it when evoking the cronyism and the Trabelsi family angle but there was deeper than the privatisations.
the other item to look at - the infra build out something one can compare to Morocco after 1999 with the 'new king' - while Morocco has a lot of flaws, the deep infra build out (roads, European quality highways out to even the remote regions and ones that don't wash away on first rains...) - contrast w Ben Ali - I was quite shocked circa say 2013 at the weak regional infra - no wonder everything is concentrated in the NE Tunis quadrant)
[as an aside once USAID asked me for an African country which I will not name to do an analysis from my PE/VC PoV how to promote investment in SMEs in a certain city / region in the interior. I said "I'll tell you for free. Build a road."
For Mexico it is also corruption, from the ground up. And the lack of a strong, fair judicial system. It is not a country where, if something wrong were to happen to you, you feel safe and confident that the judicial system will take care of you. It is highly corrupt as well. Such a great country, great people, but so much working against it.
The Philippines' TFR fell from 2.7 to 1.9 from 2017 to 2022 according to their own census. If the collapse has continued since then, it might be significantly lower now.
World Bank numbers are overly optimistic for a variety of reasons, you should check out Jesús Fernández-Villaverde on Twitter (@JesusFerna7026) if you're interested in more info about this.
For Mexico I wonder why AMLO and Sheinbaum have managed to remain so universally popular with such lackluster growth? The benefits of having Trump as your neighbor?
That’s got to be part of it although I don’t think Biden being in power made them less popular . But I think Scheinbaum is a more competent leader than AMLO. We will see. My son has actually lived there for the last 6 years and he is was not an AMLO fan and if Scheinbaum was
I’m entirely unconvinced by the get rich before you get old argument.
anyway what does the success of Poland tell us about the need for immigration or even population growth, (or for that matter modern liberalism given it was ruled by supposed fascists for a while)
I don't think anyone seriously suggests liberalism is a requirement to get rich since both Taiwan and South Korea developed while being two of worst military dictatorships of the 20th century.
I would also love to hear more of the Poland story. It seems like their recent political journey is maybe closer to UK/France/US than Hungary or Turkey? And economically, more of a breakdown of what is legitimately new and what is just managing to not screw up has led to these fantastic results.
Speaking to two countries I know directly from my own work
1. Bangladesh: there one has a case where single-family authoritarian rule had begun (like Tunisia in 2011) turned some okay-to-promising reforms into complete rot, which undercut / strangled investment building on first level development of low-cost textiles and even started to undercut that.
Concrete example: hard currency reserves diversion (some official, some not so official) for Madame the President's own-poruposes. This led the hard currency shortages for... the textile companies
I had been asked by an American entity to look at setting up a hard currency line of some kind so that their Bangladeshi buyers could ease access and buy the American inputs (in textile...) ... it quickly became very apparent as I told them "there is not a hard currency line problem, there is a Central Bank problem, FX is being diverted and under a capital control regime, the onshote people just can't get dollars." (unsaid was can't get dollars if on-shore [legallly] unless connected OR illegally off-shore via not-legal under-capitla-controls holdings e.g. in Singa in which case almost certainly a crony of the regime).
Essentially textile Mfg if not connected w regime were getting starved of hard-currency access - not deliberately per se as far as I could tell, but as a side effect of diverting FX for various reasons (plus probably outright corruption on access, harder to prove but post-revolution accusations certainly rang true). FX needed to access either new equipment to move up value chain or higher quality inputs (better fibers whatever).
These kind of details are often the Governance execution ones that are under-cutting developing countries progress. Vast swaths of regulation really are pure rents extraction - although often dressed up in language to sell to the Lefties (ILO and others e.g.) - but really about rents - whether for oligarchs or apparatchiks. Controls are so far into the world of rents extraction enablement that for most developing countries I am virtually a Libertarian in my views of what is needed (virtually but not really entirely seriously).
The revolution wasn't a particular surprise, having been in Dhaka months before the simmering frustration reminded me of Tunis in 2011.
2. Turkey: if there is a phrase Noahopnion readers should adopt for Trump based on his Fed bashing, it is one from FT commentating world (forget who used it in a side comment: the Orange Erdogan).
President Erdogan has been on a multi-year jihad against Central Bank standard inflation fighting to get low rates (on bonkers argument that high Cen Bank rates cause inflation - possibly sincerely himself as he's a footballer... but his entourage the game is to continue to doping Eastern Turkey construction and inflating away local currency debts. With 70-80% inflation.... well they've managed to achieve Argentine type results of heavy euro/dollarisation.
Very interesting, I enjoyed the 2021-22 series and I enjoyed this update as well. I would love an article on Israel's success compared to its neighbors.
Hi Noah, id love to hear what you think of Croatia’s development. Also came out of communism but with 5 years of war. Now at 43k gdp ppp, projected to go over 50k for 2025 by IMF. Will likely join OECD next year.
I wonder if Vietnam might kick-start its growth by focusing on recruiting the extraordinary first-generation Vietnamese-Americans who in Northern Virginia have excelled in academics, athletics, and socially. Many have graduated from top universities and are now doing very well professionally with the consulting firms, tech companies, and other government contractors that have fostered Northern Virginia's economic boom for the past several decades. As a result of the chaos and slowdown produced by Trump's cartoonish economic policies, some pretty good Vietnamese Americans might be willing to listen to the right offers.
I think Poland also is helped by having a massive expatriate community and a long history of high achievers who made it outside Poland like Marie Curie.
Also they are committed to education reform and improvement almost as much as South Korea and Finland. I just hope they don’t have a populist government that doesn’t continue with those positive policies or adopt bad economic ideas like Turkey. Great post, thanks!
1. How does Turkey keep going without a crisis? Does inflation just not matter? As I understand it, real GDP growth numbers are calculated by dividing uncertain numbers for nominal output with uncertain numbers for GDP deflators. How reliable are the numerator and especially denominator in an economy with that much inflation?
2. There was some talk that Bangladesh’s ousted government was cooking its GDP/growth numbers. Not sure if those allegations were ever verified.
3. Pakistan lowered its already low government spending while increasing its already high defense spending after the recent conflict. It basically has no net fixed capital formation. We think of Pakistan/India/Bangladesh as similar but the latter two will soon be 2x as rich as Pakistan.
4. Interesting that Philippines almost keeps up with other countries in Southeast/South Asia but has no obvious growth narrative (maybe remittances and back office support, but those don’t seem especially robust).
Turkey: Euro and dollarisation, heavily short-term lending for anything Turkish Lira denominated, and extensive (inefficiency inducing but compensating) compensation mechanisms (like savings guaranty linkages for Lira accounts that basically link over to EUR or USD)
Exactly. But at least they said no to authoritarian rule and I think that countries like Indonesia and Vietnam are starting to compete with products that the Philippines used to export.
Love the series! It looks like southeast asia, India, and Bangladesh (conditioned it can be stable again) is the next round of fast growth. That's still over 1B people to leave poverty so that's great.
I'm Ghanaian and love your summary. But just to add, Ghana, and most of Africa basically had fast growth from 2000-2014 because of high commodity prices due to China. Since then it's been stagnate growth for most African countries save Cape Verde, Ivory Coast, and a few others.
I've made a couple series on the history of some African countries (from pre-colonial, colonial, and modern day economics & geopol) for reading/audio. Here's 3 I recently did:
Here's Rwanda:
https://yawboadu.substack.com/p/the-economic-and-geopolitical-history-174?r=garki
Uganda:
https://open.substack.com/pub/yawboadu/p/ugandas-economic-and-geopolitical?utm_source=share&utm_medium=android&r=garki
Tunisia:
https://yawboadu.substack.com/p/the-economic-and-geopolitical-history-88d?r=garki
ETA: as a private direct investment operator w non-trivial developing markets experience I do recommend Yaw's links. I can quibble - one can always quibble, but quite well done.
Read the linked Tunisia. Knowing this case well I would suggest a major miss is the Tunisian post-REvolution lack of reform of their equivalent of the Indian License Raj - sarcastically for Tunisia refered to in French as the Kingdom of Licenses (agréments) -- business licenses and permits you need to move a pinky finger in business.
The Ben Ali regime gradually developed an extremely extensive liscense raj which served the Family and related gov and non-gov actors well to extract rents, in the case of his wife's family ownership / revenue participations in a wide network of activities - and in return for that you got whatever permit / license needed. Stifling of course for economic activity, stifling for entrepreneurship (or maybe better, since the State was promoting it, stifling of enterepreneurship that was independent and not willing to get eaten up).
Ennahda and the secular civil society post-Revolution got almost entirely caught up in the socio-cultural fights and debates and philosophising and really virtually nothing was done in terms of reforming the Tunisian liscence raj - and so the predictable stultifying (at least The Family was a source of a certain kind of "fluidity") - and the communist (really actual Cap C) oriented public sector unions obviously dominated lacking anyone to counterweigh them given a segment of private operators discredited by Benali collaboration (not necessarily willingly at all) while the opposition ended up nearly purely focused on fighting Culture Wars rather than asking themselves, how do we deliver on economic growth. (except of course in superficial ways)
Examination of this lack of reform helps understand the Kais emergence as well as his levers on power - besides the obvious ones that tend to get reported in the press insfoar as Tunisian journalists tend to universally be somewhat econ+business innumerate and blind to this.
Thanks for that, I can add that in the article I shared in part 5. I mentioned more about Ben Ali's sluggish bureaucracy in part 4, but i really like the causal link you just described about the lack of reform to Tunisia's "license Raj". Thanks!
yes indeed I read that, so was really in mode of giving extra refining. You do hint / slightly touch on it when evoking the cronyism and the Trabelsi family angle but there was deeper than the privatisations.
the other item to look at - the infra build out something one can compare to Morocco after 1999 with the 'new king' - while Morocco has a lot of flaws, the deep infra build out (roads, European quality highways out to even the remote regions and ones that don't wash away on first rains...) - contrast w Ben Ali - I was quite shocked circa say 2013 at the weak regional infra - no wonder everything is concentrated in the NE Tunis quadrant)
[as an aside once USAID asked me for an African country which I will not name to do an analysis from my PE/VC PoV how to promote investment in SMEs in a certain city / region in the interior. I said "I'll tell you for free. Build a road."
For Mexico it is also corruption, from the ground up. And the lack of a strong, fair judicial system. It is not a country where, if something wrong were to happen to you, you feel safe and confident that the judicial system will take care of you. It is highly corrupt as well. Such a great country, great people, but so much working against it.
Other countries on the list also have corruption and lack fair judicial systems so that seems like an incomplete explanation.
Governance. So often down to that.
Basic governance.
Never mind the laws on the books, how it is applied
Love the series ❤️
The Philippines' TFR fell from 2.7 to 1.9 from 2017 to 2022 according to their own census. If the collapse has continued since then, it might be significantly lower now.
World Bank numbers are overly optimistic for a variety of reasons, you should check out Jesús Fernández-Villaverde on Twitter (@JesusFerna7026) if you're interested in more info about this.
https://psa.gov.ph/content/total-fertility-rate-declined-27-2017-19-2022
(There might be nuances here that I'm unfamiliar with as far as the Philippines is concerned, so take my comment with a grain of salt.)
Why is Brazil not in the list? It is a complicated case, I'd love to know your opinion.
For Mexico I wonder why AMLO and Sheinbaum have managed to remain so universally popular with such lackluster growth? The benefits of having Trump as your neighbor?
That’s got to be part of it although I don’t think Biden being in power made them less popular . But I think Scheinbaum is a more competent leader than AMLO. We will see. My son has actually lived there for the last 6 years and he is was not an AMLO fan and if Scheinbaum was
I’m entirely unconvinced by the get rich before you get old argument.
anyway what does the success of Poland tell us about the need for immigration or even population growth, (or for that matter modern liberalism given it was ruled by supposed fascists for a while)
I don't think anyone seriously suggests liberalism is a requirement to get rich since both Taiwan and South Korea developed while being two of worst military dictatorships of the 20th century.
I would also love to hear more of the Poland story. It seems like their recent political journey is maybe closer to UK/France/US than Hungary or Turkey? And economically, more of a breakdown of what is legitimately new and what is just managing to not screw up has led to these fantastic results.
This is the kind of reporting that I should regularly see in The NY Times…*sigh*
Thank you - had NO IDEA that the DR was that successful.
Speaking to two countries I know directly from my own work
1. Bangladesh: there one has a case where single-family authoritarian rule had begun (like Tunisia in 2011) turned some okay-to-promising reforms into complete rot, which undercut / strangled investment building on first level development of low-cost textiles and even started to undercut that.
Concrete example: hard currency reserves diversion (some official, some not so official) for Madame the President's own-poruposes. This led the hard currency shortages for... the textile companies
I had been asked by an American entity to look at setting up a hard currency line of some kind so that their Bangladeshi buyers could ease access and buy the American inputs (in textile...) ... it quickly became very apparent as I told them "there is not a hard currency line problem, there is a Central Bank problem, FX is being diverted and under a capital control regime, the onshote people just can't get dollars." (unsaid was can't get dollars if on-shore [legallly] unless connected OR illegally off-shore via not-legal under-capitla-controls holdings e.g. in Singa in which case almost certainly a crony of the regime).
Essentially textile Mfg if not connected w regime were getting starved of hard-currency access - not deliberately per se as far as I could tell, but as a side effect of diverting FX for various reasons (plus probably outright corruption on access, harder to prove but post-revolution accusations certainly rang true). FX needed to access either new equipment to move up value chain or higher quality inputs (better fibers whatever).
These kind of details are often the Governance execution ones that are under-cutting developing countries progress. Vast swaths of regulation really are pure rents extraction - although often dressed up in language to sell to the Lefties (ILO and others e.g.) - but really about rents - whether for oligarchs or apparatchiks. Controls are so far into the world of rents extraction enablement that for most developing countries I am virtually a Libertarian in my views of what is needed (virtually but not really entirely seriously).
The revolution wasn't a particular surprise, having been in Dhaka months before the simmering frustration reminded me of Tunis in 2011.
2. Turkey: if there is a phrase Noahopnion readers should adopt for Trump based on his Fed bashing, it is one from FT commentating world (forget who used it in a side comment: the Orange Erdogan).
President Erdogan has been on a multi-year jihad against Central Bank standard inflation fighting to get low rates (on bonkers argument that high Cen Bank rates cause inflation - possibly sincerely himself as he's a footballer... but his entourage the game is to continue to doping Eastern Turkey construction and inflating away local currency debts. With 70-80% inflation.... well they've managed to achieve Argentine type results of heavy euro/dollarisation.
Very interesting, I enjoyed the 2021-22 series and I enjoyed this update as well. I would love an article on Israel's success compared to its neighbors.
It would be even better if we had economic data from the Republic of Palestine !
Hi Noah, id love to hear what you think of Croatia’s development. Also came out of communism but with 5 years of war. Now at 43k gdp ppp, projected to go over 50k for 2025 by IMF. Will likely join OECD next year.
I wonder if Vietnam might kick-start its growth by focusing on recruiting the extraordinary first-generation Vietnamese-Americans who in Northern Virginia have excelled in academics, athletics, and socially. Many have graduated from top universities and are now doing very well professionally with the consulting firms, tech companies, and other government contractors that have fostered Northern Virginia's economic boom for the past several decades. As a result of the chaos and slowdown produced by Trump's cartoonish economic policies, some pretty good Vietnamese Americans might be willing to listen to the right offers.
Vietnam's growth is 7.52%. The fastest in 15 years and among the fastest on the planet?
Why does it need to kick-start anything?
I think Poland also is helped by having a massive expatriate community and a long history of high achievers who made it outside Poland like Marie Curie.
Also they are committed to education reform and improvement almost as much as South Korea and Finland. I just hope they don’t have a populist government that doesn’t continue with those positive policies or adopt bad economic ideas like Turkey. Great post, thanks!
A list notable both for its inclusions and its omissions. I should update my chart in this post: https://www.ourlongwalk.com/p/south-africas-fading-relevance
Some thoughts:
1. How does Turkey keep going without a crisis? Does inflation just not matter? As I understand it, real GDP growth numbers are calculated by dividing uncertain numbers for nominal output with uncertain numbers for GDP deflators. How reliable are the numerator and especially denominator in an economy with that much inflation?
2. There was some talk that Bangladesh’s ousted government was cooking its GDP/growth numbers. Not sure if those allegations were ever verified.
3. Pakistan lowered its already low government spending while increasing its already high defense spending after the recent conflict. It basically has no net fixed capital formation. We think of Pakistan/India/Bangladesh as similar but the latter two will soon be 2x as rich as Pakistan.
4. Interesting that Philippines almost keeps up with other countries in Southeast/South Asia but has no obvious growth narrative (maybe remittances and back office support, but those don’t seem especially robust).
Turkey: Euro and dollarisation, heavily short-term lending for anything Turkish Lira denominated, and extensive (inefficiency inducing but compensating) compensation mechanisms (like savings guaranty linkages for Lira accounts that basically link over to EUR or USD)
Exactly. But at least they said no to authoritarian rule and I think that countries like Indonesia and Vietnam are starting to compete with products that the Philippines used to export.
Ah, another classic Noah Smith making something that I usually find mind-numbingly boring into something fascinating.