Eritrea, One of the Fastest Growing Economies in 2014

Development News
Fastest-Growing Economies in 2014. Eritrea
Fastest-Growing Economies in 2014. Eritrea

By Washington Post,

The Economist Intelligence Unit has released its projections for economic growth in 2014, including the economies that are expected to grow the most this year. The results are telling – and have implications way beyond these 10 countries.

Before I get to the rankings, a note: I’ve removed two of the countries from the original list of 12.

I pulled South Sudan, which is ranked first with an astronomical expected GDP growth rate of 35 percent, since that number is a little misleading. South Sudan shut down its oil exports in January 2012 amid a dispute with its northern neighbor, Sudan, which devastated its economy. So we’re not really seeing “growth” so much as the continued return to the norm after that very bad year.

The second country I removed was Macau, ranked third with 13.5 percent growth, since it’s not a country; it’s a city-size special administrative region of China.

That out of the way, here are the 10 countries that are expected to have the most economic growth in 2014, ranked from first to last by percentage of GDP growth:

2014 Top Growers
2014 Top Growers

There are three important trends here. The first is that all of these countries, with the exception of Libya, are very poor. The second is that in most of them, economic growth is being driven by natural resources; often a single natural resource. The third, and maybe most important, is that many of the booms come from the sale of those natural resources to developing countries, often to a single developing country.

It’s nothing new for a very poor country to grow its economy by selling a single natural resource to richer countries. Maybe the most famous example is Saudi Arabia, which has been transformed by a half-century of selling oil to Western countries. The Persian Gulf, and the broader Middle East, have never been the same.

These numbers show a newer kind of trend, one that could have a similarly world-changing impact: Rising economies such as China and India reaching into nearby, resource-rich countries that have not benefited as much from Western demand. A knock-on effect of the rise of China and India is that Turkmenistan and Bhutan are changing, as well.

That is far from necessarily a good thing for the countries selling those resources. There’s a reason that economists call it “the resource curse” and not a “resource blessing”: The resulting boom weakens non-resource industries, can foster corruption, causes lots of inflation and can even spark internal competition for control of the precious resources. And all the growth from, say, selling natural gas or coking coal to China is just not very sustainable: When China stops buying, the comedown can be even worse than the initial high.

Top-ranked Mongolia has by some measures has been the world’s fastest-growing economy since 2012, fueled almost entirely by the sale of natural resources to China. The country is working really hard to figure out how to make its growth sustainable. But it hasn’t figured it out yet, and in the meantime the economic growth has created lots of pollution, economic inequality and a huge urban poverty problem as communities that have been happily nomadic for centuries are pulled into the newly booming cities.

The effects of these changes could extend well beyond, say, the Mongolian capital, Ulaanbataar. What does it mean for China when the very poor countries providing its resources become less poor? If Turkmenistan’s natural gas exports continue to rise, what will that mean for the economies of nearby gas exporters Iran and Russia? Will development in Sierra Leone, which has been involved in a number of larger West African conflicts, make further conflict less or more likely?

Development can be predicted; it’s not impossible to see how economic trends are likely to play out in specific countries. But the effects of that development can be much tougher to foresee.
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