• by Yilmaz Akyuz
• Wednesday, April 18, 2012
• Inter Press Service

Growth in developing economies (DEs) has accelerated significantly in the new millennium. Whereas in the 1980s and 1990s their average growth was barely higher than that of advanced economies (AEs), from the early years of the 2000s until the global crisis, the difference shot up to 5 percentage points. It widened further during 2008-11 with the collapse in AEs. Although there is diversity, the acceleration is broad-based with all developing regions enjoying faster growth than in the past. The notable exception is China, which has grown in the new millennium at broadly the same (albeit rapid) pace as in the 1990s, writes Yilmaz Akyuz, chief economist of the South Centre, Geneva.

For several reasons the exceptional growth enjoyed by the South over the past ten years is unlikely to be sustained over the medium term. First, returning to the extremely favourable international economic conditions prevailing before the global crisis is precluded by the large adjustments now facing the AEs. Indeed, efforts to move policy back to "business as usual", with the U.S. acting as a locomotive and running growing deficits, would seriously destabilise the international trading and monetary systems.

Most DEs need to overhaul their development models in order to sustain the kind of growth they have enjoyed over the past ten years. The export-led Asian economies need to reduce their dependence on consumers in AEs by expanding domestic and regional markets. Commodity exporters need to reduce their reliance on capital flows and commodity earnings ­the two key determinants of their growth that are largely beyond national control. These call for a genuine departure from market fundamentalism and neoliberalism both in macroeconomic and structural policies.

* Yilmaz Akyuz, chief economist of the South Centre, Geneva. For further analysis see South Centre Research Paper 44 (http://www.southcentre.org)

© Inter Press Service (2012) — All Rights Reserved. Original source: Inter Press Service

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