Explaining Relative Economic Performance

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Over the past decade those on the way down:

Libya, Yemen, Equatorial Guinea, Greece, the Central African Republic, Sudan, East Timor, Lebanon, Greece, and Trinidad & Tobago. In Syria and Venezuela data collection has stopped altogether, but they would make the list too.

War, dictators, the EU and socialism.

On the way up:

Ethiopia had the highest growth rate of the decade, with Nauru, Rwanda, Ghana, Mongolia, Turkmenistan, Laos, China, India, Bangladesh, Cambodia, and Myanmar as other winners too.

Less war, less dictatorship, less socialism.

You know, there’s a pattern there.

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Chromatistes
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Chromatistes

In 1984, Trinidad and Tobago issued a government bond with a 12.5% coupon, and maturity either in 1989 or 2009, at the holder’s option. I bought a significant proportion of the issue for my life assurance company. T&T’s credit rating plummeted shortly afterwards, in line with the oil price, and I was relieved to exercise the repayment options in 1989. It turned out to be entirely the wrong decision, when interest rates collapsed, and 12.5% for the remaining 20 years would have been an excellent return. Not sure I would invest in T&T today.

Bloke in Germany
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Bloke in Germany

And yet Greece, parts of Lebanon, are places you could live in rather well and may want to. None of the countries on the “up and coming” list, with the possible exception of parts of India, are, or are ever likely to be in the foreseeable. Growth rates from near-zero should always be impressive.

Also, less socialism in Cambodia? Less dictatorship in China or Myanmar? Really?

I think we can call war and dictatorship bad without recourse to GDP growth.