NCPA - National Center for Policy Analysis

Countries That Lag Behind

June 12, 1997

Nearly every country in the world that has adopted capitalist principles and achieved economic reforms in recent years has begun to reap extraordinary financial rewards. But some still lag behind because, in the view of Harvard University economist Jeffrey Sachs, they got the short end of the stick in terms of geography, climate and natural resources.

But the Harvard Institute's study, "Emerging Asia," blames bad governments for 1.7 of those 4 percentage points; lean natural resources, poor access to transportation and fragile tropical ecology for 1 percentage point; and short life expectancy for 1.3 percentage points.

Sachs, who is director of Harvard's Institute for International Development, says these factors are holding down growth in some Latin American and sub-Saharan African countries.

  • Since the 1980s, when most poor countries abandoned central planning and opened up to foreign investment, per capita income has doubled at a pace of more than 4 percent a year.
  • But between 1965 and 1990, economic growth in sub-Saharan Africa lagged that of East Asia by 4 percentage points.
  • Growth in Latin America has lagged that of East Asia by 3.9 percentage points -- but in its case, location accounted for only six-tenths of a percentage point.

Sachs predicts that if Asia continues on its recent growth path, its share of global output will rise from a meager 17 percent in 1950 to 58 percent by 2025.

But the tropics in general and sub-Saharan Africa in particular will barely reach half the GDP per person of temperate zone countries in the foreseeable future -- and then only if they get their act together on economic and population containment policies.

Sachs recommends an emphasis on disease control in these tropical countries. He is particularly interested in seeing Western countries open their markets to entry-level manufactured imports -- clothes and shoes, for example -- from the tropics.

Source: Peter Passell, "Capitalism Doesn't Always Take. Location, It Seems, Is Destiny." New York Times, June 12, 1997.


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