The Covid-19 crisis has left many severe economic crises worldwide, but developing countries have real opportunities to rise in the coming period.
In an article in the American “New York Times” newspaper, economist Rocher Sharma believes that despite the decline in manufacturing and exports on a global level during the last period due to the Corona pandemic, the transformations caused by the epidemic, such as the acceleration of the digital revolution, the adoption of economic reform programs and the rise Commodity prices provide favorable conditions for the recovery of a number of emerging economies.
The 21st century witnessed remarkable economic growth for emerging markets, whose share in the global economy had doubled to almost 35%, and by 2007, 107 – out of 110 developing economies – had joined the United States in average income, according to the Human Capital Index of the University of California and Groningen, which helped millions To get out of poverty.
The 2008 crisis has led to stagnation in developing economies and a decline in their share in the global economy. Half of them have declined in average income compared to the United States, according to the same index.
And such a decline is considered normal – as the writer says – and is not a cause for concern, because developing countries can achieve good growth rates for a decade or two, and then return to the starting point due to global economic crises. He believes that there are promising indications that these countries can emerge from the current crisis with many gains.
The digital revolution
The Corona crisis has led to an increased dependence on digital technology, and this could benefit developing economies in a sustainable way, as these countries seem less associated with “old infrastructure” and are relying on wireless technology faster than developed countries.
Despite the problems of old government-run industries, a country like China is achieving faster growth rates than the United States, and has managed to maintain average income thanks to the accelerated reliance on the cashless economy. The writer believes that the digital revolution will play a major role in driving the growth of emerging economies during the coming period.
The United States and a number of other developed countries have worked to address the Corona crisis by increasing government spending, which may negatively affect growth rates in the future.
As for the developing countries – which do not have large capacities to spend in order to support the economy – they have relied on some measures and reforms that are expected to enhance productivity and raise growth rates, although they often do not enjoy popular support.
Within this direction, India has enacted new laws aimed at encouraging investments in the agricultural sector, and Indonesia is working to reduce taxes and dismantle the administrative red tape system in order to stimulate investment and create more jobs, and Brazil is also moving forward with its plans to reduce pensions that constitute a great burden on the state, Saudi Arabia is reforming immigration laws to open competition in the labor market.
Total reliance on commodity exports, such as oil, minerals and agricultural products, prevents the achievement of significant growth rates in a number of emerging countries, and the failure of per capita income to reach the levels of developed countries.
But in periods of high commodity prices, which is expected over the next decade, this would build up wealth in a number of emerging markets such as Brazil, Russia and Saudi Arabia.
In addition, other developing countries have been able to invest successfully in manufacturing industries, including Poland, which hosts multinational companies specializing in the manufacture of cars, electrical equipment and other commodities. A similar transformation is taking place in Vietnam, which is investing in a number of new industries and implementing programs to eradicate poverty.
And if only a few countries are able to profit from export industries, many other developing countries have the opportunity to prosper through economic reform programs, a potential recovery in commodity prices, or reliance on the accelerated digital revolution.