Factors in economic development of second and third world

[energiewende]

If he can summarise his arguments into just a few points, I may reply, but certainly not to a wall of text.

Nice concession there. Now answer the following:

Ghana is near Mongolia based on the Heritage index (which I assume you use), also started at a very low base, but does not exhibit double-digit growth rates. Ghana receives only half the aid Mongolia does, incidentally.

Wikipedia page "Economy of Ghana":

GDP growth 8.7% (Q1 – 2012)[2]
14.337 % (2011 est.)[3]

Did you just assume I wouldn't check it, or what?

If you really want to go down this route with some semblance of academic rigour you would perform regression analysis over the entire data set and then control for current GDP per capita and aid as % of GDP. Let me know what you find; maybe it will even be publishable. But don't be surprised when it totally contradicts your prejudices.

instead you just ramble about how mean Stas puts a wall of text which you can't reply to.

Not interested in, rather than can't. If you pay I will reply to your wall of text (yes, I will permit you to exploit me!); but i regard it as work not enjoyment which is why I post about economic topics.

[madd0ct0r]

Ghana is near Mongolia based on the Heritage index (which I assume you use), also started at a very low base, but does not exhibit double-digit growth rates. Ghana receives only half the aid Mongolia does, incidentally. Uganda, another Economic Freedom Index neighbor, is growing slower yet, but started at a base which is much, much lower than Mongolia. All neighbors of Mongolia in the Economic Freedom Index, despite a low starting base (often lower than or equal to that of Mongolia itself) exhibit far lower growth rates. Croatia has a negative GDP growth rate (recession), Sri Lanka and Madagascar growth stands at 7%. Paraguay, another low-base neighbor, has a recession.

let's not mess around with wiki people:
World bank stats.
---
Mongolia - http://www.worldbank.org/en/country/mongolia

Population 2,800,114 2011
GDP $8,761,426,371 2011
GDP growth 17.5% 2011
Inflation 9.4% 2011
---

Ghana

Population 24,965,816 2011
GDP $39,199,656,050 2011
GDP growth 14.3% 2011
Inflation 8.7% 2011
---

Uganda

Population 34,509,205 2011
GDP $16,809,623,488 2011
GDP growth 6.6% 2011
Inflation 18.6% 2011
---

Croatia

Population 4,403,000 2011
GDP $62,493,220,673 2011
GDP growth -0.0% 2011
Inflation 2.2% 2011
---

Sri Lanka

Population 20,869,000 2011
GDP $59,172,135,298 2011
GDP growth 8.2% 2011
Inflation 6.7% 2011
---

Madagascar

Population 21,315,135 2011
GDP $9,911,781,296 2011
GDP growth 0.9% 2011
Inflation 9.4% 2011
---

Paraguay


Population 6,568,290 2011
GDP $23,836,769,721 2011
GDP growth 6.8% 2011
Inflation 8.2% 2011

To be honest, all I'm getting from that is inflation is generally high, and based on when I was living in Vietnam, double digit growth means nothing unless it out paces inflation. If capital is required for a person's standard of living to increase (ie buying a house, investing in a shop or new set of tools), I'd argue inflation is far more crippling for the poor as well as for domestic investment by the rich.

[energiewende]

The three relevant statistics are:

1. GDP per capita
2. GDP per capita growth rate
3. Position in Heritage Foundation "Index of Economic Freedom"

You only posted one of these.

Feel free to do the actual regression analysis with all data rather than just cherrypicks, and with proper sources (World Bank and OECD figures are indeed publicly available); however I do not need to resort to such things to prove his example was wrong because he did not bother put any effort into it at all. In fact Ghana claims that the IMF nominal stats show it as having fastest GDP growth in the world. That involves bit of datamining too but it should illustrate the stupidity of choosing this as one's flagship example of a low-growth economy.

[madd0ct0r]

dude, you're attacking me for not providing all of the stats when I provided them for all countries in question on the only stat you did (and using wiki no less?)

Christ, it's not like I was even arguing against you. Quit flailing widely.

[energiewende]

I'm not "attacking" you I am saying that the statistics you provided do not let me make a better estimate (my wiki stat is the same as the one you provided btw).

I could of course recompile the data myself but why should I bother? The counter-example he tried to make is wrong and his furious datamining isn't making his argument any stronger. I use wikipedia only to show how little effort he made. If he wants to do some "proper" job, that is publication-level, I have told him what to do but I am not going to invest hours doing it for him.

[K. A. Pital]

I'm not "attacking" you I am saying that the statistics you provided do not let me make a better estimate (my wiki stat is the same as the one you provided btw).

I could of course recompile the data myself but why should I bother? The counter-example he tried to make is wrong and his furious datamining isn't making his argument any stronger. I use wikipedia only to show how little effort he made. If he wants to do some "proper" job, that is publication-level, I have told him what to do but I am not going to invest hours doing it for him.

Yup, I'm really furious at some worthless forum lurker. That's why I spend zero effort on debating with you and can make an error by not looking year-by-year figures for Ghana, since I couldn't be bothered and just quickly looked up the numbers in Wikipedia without reading anything around them.

However, you have basically ignored the core argument and picked just one nation out of several which I mentioned. Your explanation for much lower growth in all the other nations is... what? Oh, I know. "They suck". Or better yet, they don't have markets. Bbbut, according to the Index, they all have roughly the same degree of market freedom (let's forget for a second that the index is bullshit).

So your explanation of the diverging growth rates is?

[PeZook]

If a country has a very small GDP it doesn't need to set up a huge factory to grow by 10%. Just increasing agricultural efficiency (for instance) would do it. That is the point. If you think this is something that is recognised by scientific economics feel free to post a journal paper; I can access them.

Do you think you can increase efficiency in sectors of the economy to arbitrarily high levels without capital investment? If so, then why didn't neolithic Europe industrialize in the ten thousand years it had to grow from low levels of devleopment? At 2% growth it shouldn't take more than oh 1500 years to go from hunter-gathering to trillions of dollars

But as it turns out eventually you need to implement technology to keep growing, which requires capital. If you are a tiny economy, you will have to painstakingly accumulate that capital over decades, sometimes even centuries, or get people to invest. China is making massive investment and still industrializing today, so it grows faster than Sao Tome even with much less aid as % GDP, especially since Sao Tome is hardly prime industrial development land in comparison. They'll have to make do with tourism and agriculture.

If you think other factors than policies matter then please tell me what they are. But first thing: can I justify this being more important or comparably important than policy?

Oh, there's no doubt that policies are important, but they are worthless without stability of governments and institutions (why is Switzerland a haven for the rich?), infrastructure and the right political climate (for example, it's hard to do business in your country if you are being embargoed by half the world, no matter how free your economy is).

Refer to my earlier point: if implementing "market oriented" policies in a country will cause widespread unrest and political instability, it won't necessarily help with business at all. Riots and tend to do that.

USSR didn't outpace Western countries. In fact it ended up about the same place relative to the Western countries as the Russian Empire had been (despite that we expect poor countries to grow faster, all else equal.).

It had PERIODS where its growth outpaced Western countries, like during the first three Five Year Plans - yet as the name implies they were a centrally planned and implemented program, so no market policy present.

[Surlethe]

US imperialism intended to install "economically friendly" governments contributed to economic stagnation!

Actually, I can't remember any of the US-sponsored Latin American dictators who would've been remotely capable at managing a nation (all of Latin America massively declined during the period of US meddling in LA in the 1980s), whereas the left-wing, but democratic and stable government of Uruguay, which is in power for nigh a decade, has been hailed as a great success, and not without reasons.

"US imperialism INTENDED to install ..."

[Simon_Jester]

Besides which, the US did not actually care whether those countries were well managed in general, and was more interested in "economically friendly" as in friendly to the US economy. In other words, friendly to US business interests. That might not be the best way to keep your country from stagnating.

[Dr. Trainwreck]

Besides which, the US did not actually care whether those countries were well managed in general, and was more interested in "economically friendly" as in friendly to the US economy. In other words, friendly to US business interests. That might not be the best way to keep your country from stagnating.

Which was my point: it wasn't just something the US did, as every world power exploited the various natives for its own gain. Too bad energiewende went full defense instead of just asking for an explanation of my original post. This whole discussion is a massive failure to communicate.