Why some countries are called developed while the others are referred to as developing? Maybe it’s about developing countries’ obsession with higher GDP growth. It occurred to me that developing countries will ever become developed? I must say that latest reports issued by international institutions, especially by the IMF, do not seem promising at all.
As I teach different development theories and theses in my PhD classes, I can see there are two different arguments about this subject.
- There’s a major difference between Development and Growth. Without structural reforms, development can’t be achieved.
- Underdeveloped countries can’t become developed because they just can’t!
Although the second argument seems careless and unsystematic, it also reflects the general idea that underdeveloped countries will never achieve development. According to some experts, the fact that some countries focus merely on GDP growth and meanwhile ignore the “human” factor is purely traditional. In short, they say it’s hard for developing countries to stray away from traditions.
The IMF report shows that developed countries are falling behind developing countries in generating GDP. However, developing countries’ appetite for higher growth doesn’t seem to be very effective in boosting exports. It can be clearly seen that developed countries take the lion’s share of export markets, considerably surpassing developing countries. Although China’s share of export markets is larger than the US share, EU’s share of exports is two-fold greater than China’s. This situation clearly reflects that developing countries are still stuck on quality/price competition while developed countries continue to strengthen their position as nations who “discover the unknown and use the advantages of their discovery” in technology and information competition.
I have less and less hope that Digital Transformation will actually help close the gap between the developed and the developing countries. Considering the fact that companies dominating the digital economy have started a new “colonization” movement as a large part of their profit comes from their operations in other countries, it looks like the “change of power” will emerge though not economically, but out of “political polarisation”. Maybe this is be the approach we should take when arguing the S-400 and F-35 issues.
I think I would not be wrong in saying that the gap between the developed and developing countries will close in terms of GDP growth, but the gap between them will grow bigger when it comes to achieving sustainable development.
In conclusion, structural reforms stand out as the main factor that is capable of explicitly demonstrating the clear difference between growth and development.