Like every Friday, from Raj Nallari and Breda Griffith's lecture notes.
The Period from 2000 to 2005
The table below compares per capita GDP growth for high income, low income and middle income countries from 2000 to the present. It is clear that developing country performance has been much stronger throughout the period. Contributing to the positive growth performance has been buoyant trade—world exports grew by 14 percent in 2005, low interest rates, higher commodity prices, and strong growth among the Organisation for Economic Cooperation and Development (OECD) countries.
Per capita growth rates by income group, 2000 to 2006 (forecast)
2000-4 2003 2004e 2005f 2006f
H. I. 1.6 1.4 2.7 1.9 2.0
M.I. 4.0 4.5 6.3 4.9 4.6
L.I. 3.2 5.1 4.5 5.3 4.7
Dev. count 3.6 4.3 5.7 4.7 4.5
Compiled from Table 1.1 Global Economic Monitor 2006
Furthermore, macroeconomic performance among developing countries in terms of inflation, current account balance, external debt and fiscal balance has been significantly better than in the 1990s, contributing to the good growth performance.
Improvements in world economic growth during 2000–05 continued to help sustain poverty reduction. According to the Global Economic Monitor (WB, 2006), simple projections based on aggregate income growth suggest a 10 percent reduction in poverty, a movement of over 100 million people out of poverty. However, the overall good performance masks significant regional differences in the poverty response. Poverty decline among the regions has been most rapid in the East Asia and Pacific region as stronger growth resumed after the financial crisis. South Asia has made improvements in poverty reduction and also is expected to achieve the poverty reduction goal of the MDGs. Less favorable is the experience of Eastern Europe and Central Asia and Sub-Saharan Africa. The proportion of the population living on less than US$1 a day in Eastern Europe and Central Asia increased over the 1990 to 2002 period from 0.5 percent to 2.1 percent due to the recessions among the transition economies. In Sub-Saharan Africa, the proportion of the population living on less than US$1 a day in 2002 is far higher (about 44 percent) and substantially above the MDG target of 22.3 percent.
Net capital flows reached US$324 billion, a record high, in 2004, increasing by US$42 billion on the previous year and maintaining the recovery that began in 2003. However, the picture is less rosy when flows are measured as a proportion of GDP – equaling 4.5 percent of GDP in 2004, a marginal increase from the 4.3 percent share in 2003 but significantly below the shares reached in the mid-1990s when net flows as a proportion of recipient country’s GDP reached 6 percent and higher on average (GDF, 2006). Inflation, economic growth and the sizeable depreciation of the US dollar in recent years account for the less robust nature of net capital flows measured relative to economic activity.
- Fridays Academy