McKinsey Global Institute study shows poorer nations are becoming much richer at an increasingly rapid rate
 Even in the distant past, before today's widespread corrupt practices, media found it difficult to report good news unless it promoted advertisers or causes close to their hearts.
That's because news is defined as something new that stands in sharp contrast to normal day-to-day humdrum reality. Given that, news is usually something negative when all is right in the world.
Conversely, when all is wrong in the world, newsworthiness reverses itself, like the time the New York Times reported that a wallet containing US$200 was turned in to a local police station. The fact that fact was considered newsworthy showed that dishonesty had become the norm and an honest act had become rare and hence, newsworthy.
Today's good news goes largely unreported because it goes against the reigning narrative of orthodox journalism. Yet it has been known in the international shipping circles for some time, despite its lack of general coverage. That is, the news of the growing prosperity of the once impoverised third world.
The shipping world has long been aware that container terminals had been erected in Africa and other parts of the third world. No one invests in container terminals unless there is trade to warrant such investment. That means people to buy imports and produce exports.
Lately, the American think tank, the McKinsey Global Institute, has published a study that quantified the trend, breaking down areas of the third world's per capita GDP into deciles, or tenths, in terms of income and longevity. The study covers the period from 2000 to 2019. Those involved in world trade, need not be told, what the McKinsey reminds us, that per capita GDP figures do not truly approximate the average income of individuals in a given catchment area as their decile breakdown clearly reveals. A few billionaires beseiged by millions of paupers will make a lie of such calculations.
Yet interesting passages remain. "While it is generally known that humanity has progressed over the past two decades, our granular data reveals the true extent of that progress and where it took place," said the McKinsey report. "For one thing, almost half the world’s population in 2019 lives in places with living standards only attained by the top 21 per cent in 2000.
"At the other end of the spectrum, the group of more than one billion people who lived in microregions with the lowest living standards at the beginning of the 20-year period had dwindled to a few hundred million by the end, despite increasing population. Here, we examine the trajectory of that progress across the globe," the study said.
What was interesting from McKinsey's graphic maps was that in the year 2000, nations in the pink of economic health were pretty much limited to the OECD, the rich country club of the Organisation of Economic Cooperation and Development. By 2019, much of Latin America, chunks of Africa and lots of Asia were in the pink too. While old shipping hands were aware of this, it came a something of a surprise when presented on contrasting world maps.
By 2019, median longevity jumped to 73.7 years of life expectancy and US$9,511 of GDP per capita - or four more years of life and 2.5 times more income. This means that, at the 2019 median, microregions had living standards that in 2000 were experienced only among the top 28 per cent of microregions in GDP per capita and the top 23 per cent in life expectancy. What was then top quartile since became the norm.
One of the more striking examples of developmental progress occured in Kaysone Phomvihane, Laos. It has long served as a crossroads of trade and transport in Southeast Asia. The French established an administrative and commercial centre there, and during the Vietnam War, it was home to a US air operations base. During the 20-year period of our research, the microregion benefited from national and multinational programmes aimed at integrating Laos into a regional transportation and trade hub. A bridge across the Mekong River linking Kaysone Phomvihane to Mukdahan, Thailand, was completed in December 2006, reinvigorating old trade routes.
"The Asian Development Bank, together with regional and national governments, have invested in infrastructure to support the reintegration of the region, including major sanitation and flood mitigation projects. The outcomes of such progress increased Kaysone Phomvihane’s GDP per capita between 2000 and 2019 from about $1,500 to $10,000, or about 10 per cent annually, while life expectancy went from 54.1 years to 65.8 years," the study said.
"For our second example, we move to a mountainous microregion in the Albanian Alps, the town of Diber. While Diber’s economy remains dependent on agriculture and animal husbandry in particular - meat production is a mainstay of the Albanian economy - this microregion is working to build a tourism business to capitalise on its abundant natural beauty. The area, distinguished by glacial lakes and many old forests, lends itself to outdoor tourism, and international organisations have supported development of hiking trails and the hospitality and tourism industry. This includes efforts to promote the Peshkopi thermal baths, enriched by two sulphurous springs rich in gypsum and potassium, that historically drew flocks of well-heeled European health tourists.
Like Kaysone Phomvihane, Diber made an impressive move on the health and income map, in its case from a higher base. GDP per capita increased by $6,900 to $10,200 in 2019, and life spans extended from 74.1 years to 78.3 years.
A third example is the South Korean port city of Busan, one of the largest harbour in the world and a big reason for the microregion’s strong progress to greater prosperity. "But Busan is much more than its port; its beaches attract locals and international tourists alike, and more recently, some of the world’s most expensive yachts. The annual Busan International Film Festival, which started as an effort to diversify and revitalise the port area, has turned the city into a one-stop shop for film production and marketing. In 2021, UN-Habitat, a unit of the United Nations that works to enhance the sustainability and resilience of cities, teamed up with Busan and a team of architects, designers, and engineers to build what is to be the world’s first floating community, putting the city at the forefront of the global effort to address the impact of climate change on coastal locations," said the study.
"From 2000 to 2019, people living there gained 7.3 years of life expectancy, and GDP per capita more than doubled from $17,800 to $37,350. Rapid pace of development was not restricted to places that started with low incomes," the study said.
What can be appreciated from the McKinsey research is that much more of the world has become and will become a market, not only of consumers but producers as well. Both buyers and sellers can be accommodated, but only if world shipping can stay on course, which involves resisting regulators who wish to expand their power by enacting more burdensome rules and mandates which hamper growth, which make trade expansion more difficult if not impossible. |
