Y2K EVERY DAY:

The late developers' trek (George Zhibin Gu, 5/04/05, Asia Times)

Throughout history, unequal development has been the norm; there has never been a time when different nations did not have radically different levels of development. But the economic forces causing a convergence of development levels have never been so powerful as they are today. The countries moving ahead most quickly, including India, China, Egypt, Brazil and Russia, might be called "late developing nations". It goes without saying that the late developers face many huge challenges. But they also have advantages. Many have leapfrogged transitional stages of development by adopting more advanced technologies.

For example, China has jumped directly to ATM cards, bypassing the checkbook stage. Since its ineffective legal and banking systems can hardly support the wide use of checkbooks, ATM technology has nicely covered up the holes. Another example is mobile phones being adopted before conventional landlines: China now has more handsets than wired phones, 340 million versus 317 million, a direct result of developing late.

China's rapid development has generated vast interest around the globe. Any developing nation that can consume 100 million hamburgers, sodas, and chocolate bars a day is sure to attract interest from the McDonald's, Coke and Nestle men. As the Chinese saying goes, "it is easier to share good fortune than misery". Today, foreign investors are racing into China and benefiting hugely from the expanding pie. But they are contributing more than capital, products and services: these foreign "wolves" are making the domestic "sheep" run faster. Lenovo, the Chinese PC maker that recently acquired IBM's legendary PC unit, is only one of the new domestic competitors produced by the "wolves".

India provides more examples of this phenomenon. Indian railroads may be third-world quality, but its "IT army" is world-class, and has become a powerful link between India and global economy. And watch out for the Indian biotech industry, which is also on the move.

China and India are not the only late developers. Islamic states, Latin American countries, and the ex-Soviet states are other examples of countries facing a common situation: underdevelopment, but with plentiful natural resources. Rising commodity prices recently have been a boon for these nations; resource revenues, particularly for oil, have boosted their economies more than any conceivable aid program ever could. The resource windfall has opened the door to sustainable development for them - if they are wise enough to enter it.

It's not dissimilar to the advantage Japan and Germany had over countries that we didn't destroy in WWII.

Posted by Orrin Judd at May 3, 2005 9:02 AM