Dambisa Moyo, an international economist with expertise on the BRICs and the frontier economies, has explained in an essay for the Wall Street Journal why “China is no model for poor countries.”
Noting that the world’s emerging economies are facing an emerging crisis, Dambisa believes that whilst state-centered growth may seem like an answer to popular unrest, the long-term costs are too high. This is because the “sheer size of the emerging economies…means that their actions can jolt equity and bond markets, shift foreign exchange rates, bump commodity prices, alter global trade and shape corporate investment decisions.”
Although China’s track record is unquestionably impressive, Dambisa provides three reasons to show why the Chinese model isn’t as viable as its admirers in the emerging world often think:
- First, unlike many emerging markets, China’s growth has been driven largely by exports.
- Second, an economic system with the state at its heart is inefficient because it dislocates markets.
- Finally, policies that mimic China may yield a short-term burst in employment, but they also produce serious negative externalities and economic dead weight.
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