JOHANNESBURG Jan 25 Emerging economies,
including many in Africa, are enjoying some of the strongest GDP
growth rates in the world but much of this growth is an illusion
and could be detrimental over the long term, a new book says.
"Gross Domestic Problem: The Politics Behind the World's
Most Powerful Number" argues that far from being a sign of
economic progress, the growth measured by gross domestic product
(GDP) comes at a cost because it is often accompanied by natural
resource depletion and high income inequality.
Its author, Lorenzo Fioramonti, is associate professor of
political science at South Africa's University of Pretoria.
The fixation with GDP growth compels policymakers to design
policies that promote consumerism and attract short-term
investment, he argues, but, as the West's economic downturn has
shown, the gains are unlikely to last long.
"African countries will soon realise they are latecomers to
the party," he told Reuters in a telephone interview. "Imagine
you have a party (that) starts at 8pm but it's supposed to end
at 2am. African countries have arrived at 1.30am.
"They're experiencing what is the apparent wealth and
success of being part of the party but the party is supposed to
end quite soon."
The book - which contradicts economic orthodoxy that GDP is
one of the most important economic indicators - traces the
origins of the concept from its invention by U.S. statisticians
to deal with the Great Depression.
It was then employed as a "war machine" during the World War
Two to assess the economy's capacity to support the military
effort without harming domestic consumption.
For many years, developing countries, especially in Africa,
did not have the statistical resources to measure GDP, but from
the 1970s the United Nations, World Bank and International
Monetary Fund created programmes to equip them with the
expertise to collect regular economic data.
Now, African policymakers are among the most vocal
cheerleaders for the GDP mantra, not recognising it as a western
invention, the author said.
"African leaders speak against colonialism and imperialism
but they forget that the most important device to measure
success in contemporary affairs that they're using so happily
was part of the package they got from the West," he said.
African economies are on the same track as industrialized
economies were in the 1960s and '70s but economic growth now
tends to be quicker and more short term, Fioramonti argues. This
suggests it will take less time for them to encounter the
hurdles created by economic growth.
Nations experiencing high GDP growth eventually hit not one
but three walls - economic, social and environmental, he says.
They tend to rely on export-driven economic growth which means
they are increasingly dependent on external money.
These countries are also unable to create a balance between
economic objectives and social needs, leading to greater income
inequality, said Fioramonti. He pointed at South Africa, the
continent's biggest economy but also one of the world's most
"The injustices are made worse by the policies that tend to
push for economic growth," he said. "It's a vicious cycle. It
will never happen that GDP growth will be high enough to
eradicate economic inequalities."
Finally, most African countries rely on natural resources
and by exploiting them to the extent that they need to push up
GDP they are "fundamentally undermining their future."
In a stark analogy, Fioramonti compares countries that put
up their natural wealth for sale to a person selling their
organs bit by bit.
"I may feel rich because I've got a lot of cash but it's a
matter of time that my functioning may be impaired and
eventually I may have to spend a lot of cash to try and fix the
damage," he said.
GDP-led economies tend to attract investors looking to make
quick gains, rather than those interested in a country's
long-term stability, he argues.
Fioramonti insists he is not against GDP growth per se but
is concerned that African leaders have embraced the GDP gospel
unquestioningly, while in the United States and Europe there is
a burgeoning popular and intellectual movement highlighting the
imbalances behind the statistic.
He urges policymakers to rethink what it means to grow and
to favour investment that promotes sustainability and social
justice and creates jobs that are secure, instead of espousing a
borrowed and flawed philosophy.
"If we want to create conditions where people will live more
happily and more sustainably in the future we need Africa to
show us another way," he said.