A New Golden Age

JONATHAN POWER

July 26, 1991|By JONATHAN POWER

LONDON. — London -- The shibboleths of centralized state planning have been shed with increasing rapidity in the last five years -- from Chile to Ghana, from Tanzania to India, from Vietnam to China. Not far behind the economic revolution has been an almost equally rapid move from dictatorship to democracy.

Over the next ten years we could see the entry of another 3 billion people into political states that succeed in establishing the vital elements of the good life: a chicken in every pot, the right to throw the rascals out, a free press and fair justice in the courts.

A path-breaking intellectual revolution has been beaten out of misery and malpractice. Over the past four decades we've moved from believing that climate, culture, natural resources and ideology dictate the pace of development to discover instead that it's trade, markets and entrepreneurship that move the mountains.

The first secret of success is increasing productivity, squeezing more out of less. This takes not only hard work but good educational and health services and minimal distortions by governments in the free workings of the market place. True, the governments of the great East Asian success stories, Japan, Taiwan and South Korea have been interventionist but they've been careful how they did it -- always according to public rules rather than official discretion.

The second secret of success is to invest in education and health. A recently published survey of investment in education in 60 developing countries showed that those countries that combined minimum government distortion of the market place and high levels of education grew the fastest.

A third necessity is a good and incorruptible government, ensuring competition, together with legal and property rights that are clearly defined and conscientiously protected. Not least the job of good government is to keep its country out of war. As the just-published World Bank's Development Report observes, ''Far and away the most important cause of famine in developing countries is not inadequate agricultural output or poverty, it is armed conflict.''

Next comes the need for openness to the world outside: for trade, investment and ideas so that domestic producers are continuously paced to develop new and better products.

Finally: Democracy reinforces success. Ignore those who argue that authoritarian governments in South Korea, Singapore, Taiwan and Hong Kong have proved the efficacy of a strongman at the helm, and that competing voices make economic development difficult and are incapable of making hard choices. Only a handful of the authoritarian governments out of the hundreds that have existed have been economically enlightened.

Democracies on the contrary make economic reform feasible. Political checks and balances together with open debate on the costs and benefits of government policy give the public both a sense of involvement and a stake in reform. One reason India never has been overwhelmed by unexpected famine as China and Ethiopia have is that the free press in India has always alerted central government to what was going on in the distant countryside long before the cautious bureaucrats got round to filing their gray reports.

Compared with the industrialized countries of the north, the progress of the Third World in the early stages of industrialization has been quite remarkable. It took Britain 60 years starting in 1780 to double its income. America took 50 years starting in 1840. But Turkey starting in 1957 took only 20 years, Brazil starting in 1961 only 18 years and South Korea starting in 1966 a mere 11 years. At the same time all over the Third World, parts of Africa apart, death rates have fallen dramatically and literacy rates have improved fast.

The next stage -- the great leap forward from absolute poverty to basic security -- could happen very quickly.

We now do know the recipe for steady development. The old myths and misconceptions are being buried. Only a few countries, mainly in Africa but China at times, too, have the blinkers still in place. Let's not exaggerate: We could be on the threshold of a golden age!

Jonathan Power writes a column on the Third World.

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