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Cash flows in a flat world
Recession has thrown up crazy results in the poorest nations of the world; they’ve become richer!
According to the World Bank, Congo, Liberia and Burundi are the three poorest nations of the world on the basis of their per capita GDP (purchasing power parity) ranking. While the whole world suffered from the effects and aftereffects of recession, much was written about how developed nations, first world countries, and even developing economies could come out of the economic slowdown – perhaps rightly so, as without those commentaries and debates, and without immediate changes in the top countries, the world might never have proceeded to the path of recovery.
Forgotten and completely ignored among the solution list were the world’s poorest nations, who got the worst of both worlds as one, they never mattered (or will matter) to the global economic output, and two, it doesn’t quite make good readership for the Krugmans and the Friedmans to commentate regularly on the caustic continent. Thus, it was expected that these nations will collapse in one domino wave. The ides couldn’t have gotten this forecast wronger. The poorest countries actually became richer in recession!
Congo is the world’s poorest nation. In 2000, GDP was $4.31 billion (per capita gross national income – GNI, ppp – of $210). The 2005 GDP figures were $7.24 billion; 2008 GDP figures stand at $11.59 billion (a solid growth of 168% over 2000 figures; and a per capita GNI of $290). Yes, recession seems to have been severe in employment – forestry and mining sectors lost over 2,00,000 jobs over two to three years – but that has clearly not stopped Congo’s growth, leave alone getting wiped out. Congo has shown an average GDP growth hovering around 6.5% in the last three years.
Liberia, the second poorest nation, saw its GDP grow from $0.53 billion in 2005 to $0.87 billion in 2008 (9.4% growth in 2007, 7.1% in 2008), with per capita GNI increasing from $250 in 2005 to $300 in 2008. Much credit goes to Liberian President Ellen Johnson Sirleaf, who held innumerable meetings with UN, IMF and even US officials on how to mitigate the impact of the financial crisis. And this despite FDI and aid contracting heavily.
Burundi is the next poorest nation in the world. The landlocked economy is primarily dominated by agriculture, dependent purely on international aid, a factor which in fact dramatically fell in the years leading to the recession – aid aggregated $1.247 billion in 1997, $1.2 billion in 2003 and fell to a tiny $181 million in 2005. Yet, Burundi’s GDP grew from $0.71 billion in 2000, to $0.8 billion in 2005, to $1.16 billion in 2008 (63% since 2000; an average of 4% growth over the last two years). Per capita GNI grew from $310 to $380 from 2000 to 2008.
The paradox of cash flows in a so-called flat world continues to surprise us; and we hope the Friedmans too.
By:- Akram Hoque
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