Really excited about your article on charter cities. This lady (https://www.substack.com/@magattew) might be someone worth talking to about it. I think she's from Senegal.
Yea I spoke to her. She is fighting the good fight trying to convince Africans spend more of their wherewithal to problem solve, start more businesses, and reduce complaining about an unfair global system or atrocities in the past.
I like how she doesn't discount that the system is unfair and the past was bad, but pushing through despite the constraints is the solution instead of pointlessly barking at the west to completely change a system that benefits them.
It's a bit of an exaggeration to compare Panama's dependence on the canal to Guyana's on oil, in my opinion.
Direct revenue from the canal is about 6.5% of GDP, similar to Canada's Oil and gas exports % of GDP. An important sector, but not the only relevant sector. Costa Rica right next door seems to do alright without the canal (at the cusp of high income status).
My point isn't that Panama has the same degree of rentierism as Guyana, just that it still is a rentier state. However, there are other metrics I would look at too like "rent revenue" (oil & gas, port revenue) per capita or rent revenue as a proportion of total foreign exchange revenue.
Bahrain's oil & gas export revenue proportion is lower than Panama's canal revenue proportion, but most people still think of Bahrain (and Panama!) as a rentier state. In fact there are years where Panama's canal revenue proportion is close to UAE's oil & gas proportion of export revenue (40%).
Guyana's oil & gas exports per capita is $20K and it makes up over 80% of Guyana's export revenue. Guyana's oil & gas exports per capita is close to an elite rentier state like Kuwait and Guyana's oil & gas proportion is similar to Iraq.
Panama's Canal revenue per capita is closer to $1.5K, which is closer to Russia or Angola and its rent proportion is close to UAE. In addition, Panama is more diversified in service exports. It also attracts subsustanial tourism, ICT, and insurance/finance services FX revenue.
BTW you should have mentioned Mexico and Malaysia. They're both upper middle income on the verge of becoming high income. Plus their fertility rate is above replacement which is pretty cool.
At 3% growth Mexico gets to $13.7K by 2030. By 2030, the high income threshold will be closer to $16.8K.
Mexico also has state capacity issues - some areas it is over regulated and some its UNDER regulated. Crime is also a problem. I honestly thought I was being too optimistic about Mexico.
Malaysia will be slightly under. I predicted 4.1% growth per year on average (which I think is about right). Malaysia is at $11.83K as of 2022. If it grows 4.1% per year it hits $16.3K, SLIGHTLY under $16.84K threshold.
Massive debt, collapsing currency, requiring continual bailouts, heavily dependent on food imports, threatened by Ethiopian dam construction, with a political leadership building a new capital to wall itself off from the masses, and selling chunks of its land to other countries - how in the world is that an economic success story?
2. China
Demographic collapse, stagnant internal consumption, deep financial crisis, set to enter debilitating trade wars with the US and EU which provide a major part of their revenues - what do you expect to make their economic situation improve?
I predict a significant slow down in the Chinese economy --> averaging around 4% growth per year. China as of 2022 is at $12,850. If it grows 4% by 2030 it hits $17.6K, beating what will be the new threshold for high income (I think it will be $16.84K by 2030). All of what you said above is why I predict 4% growth instead of 8% growth which they enjoyed from 2012 to 2022 ($5910 to $12,850) or the 18% growth they enjoyed from 2002 to 2012 ($1110 to $5910).
I am decently familiar with the Egyptian economy as I wrote in Q3 here:
In addition with Egypt. Somehow Egypt grow an average of 4% from 2012 to 2022 ($2690 to $4100) with all the issues you mentioned plus the coming out of the Arab Spring, Morsi coup, post coup unrest, the IMF bailouts in the mid 2010s, dispute with the Dam, and the terrorist insurgency in the Sinai. Even with all that nonsense, Egypt averaged out 4% growth.
The IMF is predicting some 4% and 5.5% growths for Egypt. The IMF is usually off for Egypt .1% at best and 1.5% at worse. I instead guessed a 3.6% growth on average.
With that Egypt, just barely eeks it out to upper middle income.
Btw, upper-middle income is not a "economic success story". I am saying that Egypt is limping to 2nd world status.
Even if you're a China pessimist it's not unreasonable to think that China will grow 30% richer by the end of the decade. Something you have to understand, all government policy is bad, some are worse than others.
Why would you think Bhutan and Bangladesh to be upper middle income but not India and Nepal? India has much better economic and political institutions than the rest of us, although it's economic mix is highly unusual. Besides, without Nepal and Bhutan can't grow anyways. They're basically the power plant and tourism hub for India. Imo India will perform better than Bangladesh.
The thresholds for lower-middle income change every year due to American inflation. If inflation averages 2.5% until 2030 then the threshold will be $5429.
I predicted that India will grow on average 9% per year from 2023 to 2020. Even then, gross income per capita for India would be $4762, which is still lower middle income by 2030.
Nepal I predicted an average of 6% growth, bringing it to $2136.
For Bangladesh, I predicted 8.6% growth on average, bringing it to $5456, barely squeaking it in.
For Bhutan it is currently, $3512 as of 2022. At 6% growth it hits $5598, again barely squeaking in to upper-mid status.
In other words, I also agree with you that India will perform better than Bangladesh (9% for India, which is 8x larger than Bangladesh, while I give Bangladesh 8.6%), but mathematically since Bangladesh has a slighly higher average per capita income, Bangladesh will squeak into upper-mid status while India will need another decade after that.
Thanks for these posts. They provide a basis for understanding the world a little better through an economic lens.
Great Article and overall analysis. Thanks for sharing Yaw
Really excited about your article on charter cities. This lady (https://www.substack.com/@magattew) might be someone worth talking to about it. I think she's from Senegal.
Yea I spoke to her. She is fighting the good fight trying to convince Africans spend more of their wherewithal to problem solve, start more businesses, and reduce complaining about an unfair global system or atrocities in the past.
I like how she doesn't discount that the system is unfair and the past was bad, but pushing through despite the constraints is the solution instead of pointlessly barking at the west to completely change a system that benefits them.
Great Analysis. Could you Maybe do a Article on Rwandas Economic and Refugee Deal with the united Kingdom?
Actually I'll probably just include that detail when I finish the economic & geopolitical history of Rwanda.
Sure I can do that but not for a while. Maybe in the summer. ,
It's a bit of an exaggeration to compare Panama's dependence on the canal to Guyana's on oil, in my opinion.
Direct revenue from the canal is about 6.5% of GDP, similar to Canada's Oil and gas exports % of GDP. An important sector, but not the only relevant sector. Costa Rica right next door seems to do alright without the canal (at the cusp of high income status).
Hi Robert,
I basically agree with your statement.
My point isn't that Panama has the same degree of rentierism as Guyana, just that it still is a rentier state. However, there are other metrics I would look at too like "rent revenue" (oil & gas, port revenue) per capita or rent revenue as a proportion of total foreign exchange revenue.
Bahrain's oil & gas export revenue proportion is lower than Panama's canal revenue proportion, but most people still think of Bahrain (and Panama!) as a rentier state. In fact there are years where Panama's canal revenue proportion is close to UAE's oil & gas proportion of export revenue (40%).
Guyana's oil & gas exports per capita is $20K and it makes up over 80% of Guyana's export revenue. Guyana's oil & gas exports per capita is close to an elite rentier state like Kuwait and Guyana's oil & gas proportion is similar to Iraq.
Panama's Canal revenue per capita is closer to $1.5K, which is closer to Russia or Angola and its rent proportion is close to UAE. In addition, Panama is more diversified in service exports. It also attracts subsustanial tourism, ICT, and insurance/finance services FX revenue.
Sources: (Harvard Atlas and MIT Atlas)
https://atlas.cid.harvard.edu/explore?country=169&queryLevel=location&product=undefined&year=2019&productClass=HS&target=Product&partner=undefined&startYear=undefined
https://oec.world/en/profile/country/are
BTW you should have mentioned Mexico and Malaysia. They're both upper middle income on the verge of becoming high income. Plus their fertility rate is above replacement which is pretty cool.
Mexico is close and I even tried being optimistic about Mexico at 3% income growth on average per year (more optimistic than IMF estimates, which has been pretty accurate post 2013: https://www.bloomberg.com/graphics/2019-imf-forecasts/#xj4y7vzkg?leadSource=uverify%20wall?leadSource=uverify%20wall)
At 3% growth Mexico gets to $13.7K by 2030. By 2030, the high income threshold will be closer to $16.8K.
Mexico also has state capacity issues - some areas it is over regulated and some its UNDER regulated. Crime is also a problem. I honestly thought I was being too optimistic about Mexico.
Malaysia will be slightly under. I predicted 4.1% growth per year on average (which I think is about right). Malaysia is at $11.83K as of 2022. If it grows 4.1% per year it hits $16.3K, SLIGHTLY under $16.84K threshold.
1. Egypt
Massive debt, collapsing currency, requiring continual bailouts, heavily dependent on food imports, threatened by Ethiopian dam construction, with a political leadership building a new capital to wall itself off from the masses, and selling chunks of its land to other countries - how in the world is that an economic success story?
2. China
Demographic collapse, stagnant internal consumption, deep financial crisis, set to enter debilitating trade wars with the US and EU which provide a major part of their revenues - what do you expect to make their economic situation improve?
Great questions Pedro.
Ditto with Md Nadim Ahmed about China.
I predict a significant slow down in the Chinese economy --> averaging around 4% growth per year. China as of 2022 is at $12,850. If it grows 4% by 2030 it hits $17.6K, beating what will be the new threshold for high income (I think it will be $16.84K by 2030). All of what you said above is why I predict 4% growth instead of 8% growth which they enjoyed from 2012 to 2022 ($5910 to $12,850) or the 18% growth they enjoyed from 2002 to 2012 ($1110 to $5910).
I am decently familiar with the Egyptian economy as I wrote in Q3 here:
https://open.substack.com/pub/yawboadu/p/5-answers-to-questions-you-may-have-ee7?r=garki&utm_campaign=post&utm_medium=web
In addition with Egypt. Somehow Egypt grow an average of 4% from 2012 to 2022 ($2690 to $4100) with all the issues you mentioned plus the coming out of the Arab Spring, Morsi coup, post coup unrest, the IMF bailouts in the mid 2010s, dispute with the Dam, and the terrorist insurgency in the Sinai. Even with all that nonsense, Egypt averaged out 4% growth.
The IMF is predicting some 4% and 5.5% growths for Egypt. The IMF is usually off for Egypt .1% at best and 1.5% at worse. I instead guessed a 3.6% growth on average.
With that Egypt, just barely eeks it out to upper middle income.
Btw, upper-middle income is not a "economic success story". I am saying that Egypt is limping to 2nd world status.
Even if you're a China pessimist it's not unreasonable to think that China will grow 30% richer by the end of the decade. Something you have to understand, all government policy is bad, some are worse than others.
Why would you think Bhutan and Bangladesh to be upper middle income but not India and Nepal? India has much better economic and political institutions than the rest of us, although it's economic mix is highly unusual. Besides, without Nepal and Bhutan can't grow anyways. They're basically the power plant and tourism hub for India. Imo India will perform better than Bangladesh.
Nothing against India or Nepal it's just math.
The thresholds for lower-middle income change every year due to American inflation. If inflation averages 2.5% until 2030 then the threshold will be $5429.
I predicted that India will grow on average 9% per year from 2023 to 2020. Even then, gross income per capita for India would be $4762, which is still lower middle income by 2030.
Nepal I predicted an average of 6% growth, bringing it to $2136.
For Bangladesh, I predicted 8.6% growth on average, bringing it to $5456, barely squeaking it in.
For Bhutan it is currently, $3512 as of 2022. At 6% growth it hits $5598, again barely squeaking in to upper-mid status.
In other words, I also agree with you that India will perform better than Bangladesh (9% for India, which is 8x larger than Bangladesh, while I give Bangladesh 8.6%), but mathematically since Bangladesh has a slighly higher average per capita income, Bangladesh will squeak into upper-mid status while India will need another decade after that.