The answer to the question, “Which are the best performing countries in the World,” varies with the year, the region and the expert to whom this question is addressed. Till the first half of 1997, the consensus among the cognoscenti would have been that the East and South East Asian “Miracle economies” constitute (with perhaps minor exceptions) the star performers of the world. The “Asian Crises” has swept away the paradigm of the “Asian Miracle,” shattering this consensus. Within the limits imposed by availability of internationally comparable data, an October 1999 paper by the author identified the fastest growing economies of the last two decades of the 20th century [http://finance.nic.in/avirmani]. This article presents these star performers.
GDP Growth Trends: End 20th Century
Table 1 shows the ten fastest growing medium-large countries in the world during the last two decades of the 20th century. Among the top 10 there are three broad growth clusters: There are four countries having a trend growth rate of between 5.3% and 5.7%, three between 6% and 6.2% and four having a growth rate of 6.9% or higher. It is interesting that even if we make a downward adjustment of 2% points in the average growth rate of China it would still be the best performer over this period. Out of the 10 High Performing East Asian economies (HPEs), referred to in the World Bank’s Asian Miracle study (1993) only one (Japan) has clearly dropped out of the top 10. Given its poor performance in the nineties, Japan is no longer among the high performers.
Many observers of ‘emerging market’ economies were surprised by the absence of their favoured countries from this list of high growth countries. The greatest surprise was the appearance of India among the top ten performers. Most observers would have stated that India’s performance ranks at the bottom third or at best the mid-range of the entire set of medium-large countries. A few may have been willing to concede that India may have performed a little better during part of the nineties to reach the top half or top third. It would be difficult to find (in 1998) more than a handful of people who could have imagined that for a continuous period of two decades India was the sixth fastest growing economy in the World. One valid reaction of sceptics would be that this is all very well for the GDP growth rate, but India could not possibly have performed so well in terms of growth in per capita GDP. We return to this aspect below.
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Table 1: Growth Trends for Medium-Large Countries: 1980-2000 (est)
Country GDP Per Capita GDP
Gr. Trend Rank Gr. trend Rank
China 10.1(8.1) 1 8.8(6.8)% 1
Korea, Rep. 7.7 2 6.6% 2
Thailand 7.1 3 5.7% 3
Singapore 6.9 4 5.1% 4
Ireland 5.3 10 4.9% 5
India 6.0 6 4.1% 6
Vietnam 6.2 5 4.1% 7
Chile 5.6 9 4.0% 8
Indonesia 5.7 8 3.9% 9
Hong Kong 5.3 11 3.7% 10
Malaysia 6.0 7 3.5% 11
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Notes:
1) The growth trend for 1980-98 is a log average of the growth trends for 1980-90 &1990-98, from WDR 1999-2000.
2) Population growth trends from WDR 1998-1999 and projections.
3) Forecasts of 1999 and 2000 are from ADB AEO 1999, IMF WEO where available.
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Chile is the only country in this group that is not located in Asia. Those dealing with Latin America may be surprised that no other country from their region is represented, while those outside the region may be surprised that it falls in the top ten. The numerous international fans of Chile’s policies may be surprised that India’s trend growth rate of GDP was higher than that of Chile. Those outside Asia may be equally surprised to find Vietnam among the top five performers. Vietnam, India and Chile performed better than Hong Kong, which just makes it into the list at the number 11 position.
Another noteworthy fact about these three countries is that each of them started economic reforms during the eighties and continued it in the nineties. Though the popular perception is that India started its reforms in the nineties, Virmani (1989) had shown that there was a significant improvement (break) in India’s growth performance in the eighties, from its dismal performance from the mid-sixties to the end of the seventies. This paper had also argued that this was due to economic reforms undertaken during the eighties, which started (albeit slowly) reversing the policy distortions introduced in the seventies.
Per Capita GDP Growth
Per capita GDP growth is a better measure of economic performance, viewed from the perspective of the welfare of a country’s people. If both economy and population grow rapidly, the former may be partly a consequence of the latter, while the welfare of the public may not have improved much because of poor growth of per capita income. Table 1 also shows the ranking of medium-large countries in terms of the trend rate of growth of per capita income. For the period 1980-2000 the ranking of the top four is the same as the one for GDP growth. China is the top performer with a trend growth rate of per capita GDP of 8.8% (table 1). If we adjust its growth rate by 2%, then it and S. Korea form one cluster with a growth rate in the range of 6.6% to 6.8%. Thailand is the only country with a per capita GDP growth between 5.5% and 6.5%. The third cluster with a per capita income growth of 4.5% to 5.5%, which includes Singapore, has an interesting addition. Ireland is the fifth fastest growing economy in the world in terms of per capita GDP (10th in GDP growth). There is a fourth cluster with a per capita growth around 4% (3.5% to 4.5%) containing all the other high growth economies. India is the fastest growing economy within this cluster, with its overall rank unchanged at number 6.
Malaysia’s performance appears much worse in terms of per capita income than it does in terms of GDP growth and both Vietnam & Indonesia move down in the ranking. The ranking of Chile and Hong Kong is on the other hand better in terms of per capita GDP than it is for GDP growth. Out of the 10 High Performing East Asian economies (HPEs), referred to in the World Bank’s Asian Miracle study (1993) Malaysia at 11th place would therefore clearly be the second country from among the HPEs to drop out of the set of star performers.
Thus the star performers of the last two decades of the 20th century are China, S. Korea, Thailand, Singapore Ireland, India, Vietnam, Chile, Indonesia, and Hong Kong. Of these only two are from outside Asia, while none are from East Europe. The representation from Latin America and E. Europe is unchanged even when we bring in the next tier of medium-large countries, which have a per capita growth trend of around 3% (2.7% to 3.3%). These are Sri Lanka, Norway, Turkey and Portugal. Thus out of the 15 fastest growing economies during the last two decades of the 20th century 11 were from Asia.
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