For decades, the prevailing consensus round that sustainably creates "rest of the world" has been continually based on the adoption of export-driven techniques and the lure of rapid economic growth that follows shortly thereafter.
Simply put, if nations invested in infrastructure and built their manufacturing bases, they should anticipate windfall export revenues that would pay the astronomical fees of leapfrogging into the future. But it turns out, as with most lifestyle issues, it's not that simple.
The obsession with a one-size-fits-all sustainable improvement method worked for Asia's tiger economies, which achieved explosive growth, fueled in particular through exports and sustained with the help of state-of-the-art trading and currency centers.
To date, just four of these economies now make a contribution of more than $3 trillion to international gross domestic product, which is related to the mixed GDP of 15 Arab countries, which explains the appeal of taking such an approach. Yet even if infrastructure and export-driven techniques had worked wonderfully in Asia as well, they should by no means have been promoted as a panacea for the world's low- to middle-income countries in Africa and elsewhere.
A critical component of the export-led boom model is widespread infrastructure financing to harness each country's untapped potential, rising monetary activity. Its proponents would also regularly cite successes in Asia, but even emerging countries that invested assets in infrastructure trends still lag their Asian counterparts in end-to-end manufacturing sectors like textiles.
This suggests that more than just an infrastructure for financial growth and a universally relevant model is needed.
After all, such techniques have their fair share of shortcomings beyond the occasional hiccup. There is often a tendency to forget that African countries, for example, no longer have the same competitive advantages as Asian countries that have effectively implemented this export-led growth model. For example, while Asian countries may want to remember a large pool of low-wage labor, wages in Africa are often higher than in other countries with similar income levels, putting them at a disadvantage from the beginning.
In addition, a focus on infrastructure fueled import surges, increasing domestic demand for less expensive foreign goods, stifling nascent local manufacturing capacities, and contributing to stable repayment problems. This, in turn, forced the poorest nations to take on huge amounts of debt (which has tripled in the last decade) to maintain this misguided model. The accelerating value of servicing that debt has displaced price-range priorities across the country necessary for the sustainable development of their economies, such as health care and education.
Of course, the short-lived increase in demand for housing may want to stimulate some financial activity, however such increases have by no means been enough to create good paying jobs for the thousands upon thousands of younger humans facing to work pressure each and every year. As a result, unemployment contributions are rising and inequality is developing between urban and rural areas and between different segments of society. And that is not all now.
There is a certain ironic cynicism in insisting that the world's developing countries build export economies from scratch. But assuming they succeed, where will these exports go? The poorest countries still need to overcome several borders in international and even regional trade due to protectionism, which does not allow them to take advantage of their comparative advantages and, without a doubt, diversify their economies. Furthermore, if growing international regions were to retaliate with their own alternative hurdles, it would block the capital, resources, labor, and supplies that their infrastructure and nearby industries need to preserve major export-driven economies.
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