How can a third world country increase its GDP per capita?

www.quora.com/How-can-a-third-world-country-increase-its-GDP-per-capita

You’ve asked what Harvard’s Lant Pritchett calls the “trillion dollar question.” Pritchett has spent a lot of his career documenting that poor countries tend to stay poor precisely because they cannot sustain rapid growth long enough to lift themselves to true prosperity. Instead, many such countries experience repeated bursts of growth, but those tend to be followed by downturns that push them back onto a slow-growth or no-growth path. Those that have achieved and sustained rapid growth, like the East Asian Tigers, have been able to pull themselves from abject poverty into real prosperity within a couple of generations.

I’d point to two complementary ways of thinking about the matter. The first is the broad lessons from countries that have succeeded in sustaining rapid growth for decades at a time. The Commission on Growth and Development, also known as the Spence Commission, did an impressive job of distilling the lessons from the success of 13 countries that maintained rapid growth since the 1950s. I cannot adequately summarize it in this space, but would encourage everyone interested in this topic to read it: https://openknowledge.worldbank

Among the lessons from the Spence Commission are the importance of relying on market signals, of taking advantage of the opportunities available in world markets, of saving and investing a lot, both in efficient infrastructure and in education and health (with a strong emphasis on the need for ensuring that all children finish school with strong basic skills). In addition, they emphasize the crucial role of leadership: if a nation’s political leaders consider growth just one among many priorities, growth will generally be allowed to slip off the table. Only a government that views growth as essential, and is prepared to sacrifice the interests of some of its political supporters to achieve it, is likely to carry the job through to completion. The volume I mention contains lots of valuable suggestions along these lines.

But frankly, the problem with taking the advice of the Spence Commission – or any other comprehensive analysis of development issues – is that it tends to be toocomprehensive. Almost all developing countries suffer from a wide variety of policy and institutional distortions, but they also tend to have limited capacity to undertake a lot of different reforms at once, as well as limited political capital/will to do so. As Pritchett likes to remind us, if a poor country had the capacity to fix all its problems at once, it wouldn’t be poor. So the problem is, where to begin?

For that purpose, I would point to the work of Ricardo Hausmann, Dani Rodrik, and Andres Velasco on “growth diagnostics,” which is aimed at sorting through the available evidence to narrow down that wide range of problems to the one or two or three that represent the “binding constraints” to achieving a burst of accelerated growth over a three to five-year period. A lot of donor agencies have put a lot of effort into this approach, but tend to run into the problem that the “binding constraints” tend to be problems that are particularly hard to crack politically – the interest groups that benefit from those distortions are too well-entrenched. But I think it could be quite different if used by the planning team in a reform-minded government itself, creating a greater sense of local ownership. But I hasten to add, maintaining rapid growth for two or three or four decades requires much more than identifying one set of “binding constraints,” taking some appropriate policy actions, and then going back to business as usual. Instead, solving one set of constraints will ensure that another emerges as the next set that need to be addressed – and on and on and on. If it were easy, more countries would have done it. But I suspect that that’s ultimately what needs to be done.

The first thing is to curb population growth. Peasants wawache kuzaana kama panya kwa slums. The overall GDP for a country like Kenya keeps increasing, but this gains do not translate to a higher GDP per capita because the population rises by an even greater margin. So it becomes a zero sum game. Remember that in most third world countries, a large part of the population is below 18 years…basically, consumers. You have probably viewed this video clip before, but this Tanzanian MP summarized it all.

https://www.youtube.com/watch?v=Ig-cotKtAKA

Hii CouchP atakwambia solution is reducing the population.

And he is right…reducing is a strong word…sounds like genocide…sema tu population control. Unfortunately, population control cannot work if we are surrounded by poor nations…juu country ikitajirika, their population will overflow here…it is hard to implement

I think you increase it by being more efficient. Curb waste. Including waste of resources. Population growth will start to taper. A third world country would improve by working on its systems. GDP is just a side measure.

I consider myself a layman on matters economics but I strongly feel we do not need to reinvent the wheel on this.
We just need to follow the steps followed by the developed countries.First we go through agrarian revolution where we are able to feed ourselves comfortably and even export surplus,then we go through industrial revolution and we can start with the small mundane products before we move to the sophisticated ones.

Isn’t that reinventing the wheel?

How?

By following the steps that developed countries followed? We should be figuring out how to skip some of them instead.

What you’re proposing is "creating a new wheel" which is what am against.

@Kdawg254, is proposing Agrarian revolution, then we hit Manufacturing. Which one should we skip ? Manufacturing and venture in space exploration?

Whether it’s Reinventing the wheel or creating the wheel it’s the same thing. The policies to achieve the best solutions are present. Following them is another story.

Skip space exploration and venture into manufacturing…nugu. We cant accelerate our growth if we follow everything they did. We have to identify the critical activities and focus on them instead. Agrarian revolution was a critical activity…but @Kdawg254 implied following what these developed countries did in a lockstep fashion which is basically reinventing the wheel.

Am only responsible for what I write,how you interpret it is beyond me.

Matusi ya nini

To revolutionize agriculture, we need to amalgamate our little pieces of 50*50 into hundreds of acres of plantations of food crops - that way we solve the issue of food insecurity. But who is ready to lose their dear piece of land?

How do we enter into manufacturing? Because we do not have the capacity to do manufacturing ourselves, we can do what China and Japan did. Invite foreign manufacturers to set up manufacturing bases here, and learn from them, and in the process copy and paste the products they are making into new products.

Our biggest drawback though is education and bad governance, our education system needs to be changed like yesterday. Reduce the number of non-technical courses in University and bring back technical institutes.

On Governance, let’s just elect leaders on merit - not on tribe (This may take 100 years to realise).

I think the main problem is population growth. As @M2Random pointed out up there. Increased growth rate is a zero sum game if the population of consumers is also increasing by the minute. There are several ways to tame this.

***. Education. You will notice most educated people never surpase 3 kids since they have learnt that kids are basically an expense that like any other expense(cars etc) has to be budgeted for by forecasting the impact of your current and future earning to determine whether the expense makes sense.

I hope someone can now implement a free secondary school program and then we can capture a lot of people that are lost in the transition from free to paid secondary school.

We can also waive payment of JAB loans in certain fields(mostly engineering and health) as long as a student promises to work for the government for at least 10yrs. These are awarded as scholarships when people are entering university and given to the best performers but they are up for review on a year to year basis based on performance.

Finally the government should fund external scholarships to various parts on the world to train it’s citizens on cutting edge technology and education frontiers that we should pursue to become sustainable (like Brazil did at the height of their economic revolution and like Kenya is doing with the SGR project). The receivers of this scholarships can only work for the GOK for a certain number of years. interesting fields would be, nuclear energy, petroleum engineering, agricultural engineering etc

If we had half our leaders like this, we could develo at breakneck speed.

The guy has basically said what I have been saying - no nation can develop when half of its people are kids, basically human rats that eat, eat, eat and then defecate, nothing else. YOU HAVE TO HAVE MORE PRODUCERS THAN CONSUMERS, PERIOD!

I honestly don’t know why this issue of growth is so hard to understand. Use yourself as an example. How do you become richer than you were last year? You increase your income/productivity. You curb wastage and loss. You stop giving birth every year. You invest in yourself in health and education. Etc etc.

For a country (which afterall is a collection of individuals), this translates into investing into its productivity engines (infrastructure, energy etc). Curbing corruption. Curbing population growth. Investing in basic education and healthcare.

The way Kenya is currently going about it is all wrong. We have created the fallacy that everybody has to have a university education, and that simple district hospitals must have cancer treatment depts. Actually, what you need is to have a near-100% literacy, hata kama hao watu walifika Std 8, and an effective primary health care system that manages/treats malaria, HIV, trachoma, typhoid, TB, pneumonia etc etc and refers more complicated cases upwards to four or five referal points.

True.

I think hapa you’ve stretched it sana. It is important that Dist. Hospitals have those things for ease of reach by “common mwananchi” in diagnosis and treatment of cancer to ease the congestion at Kinyara Ozpital. Yani ukiwa mkonjwa tu pale Skata, sio lazima upande Mvumilivu pale Kanduyi ili uje Kinyaraa ubook siku yako ya treatment tena upande Classic kurudi huko kungochako tu hifyo nanii. Just that.

In a competitive language of instruction like English or Mandarin, yes. Huko ma Afghanistan, Who’s Becky Stan? and most of those Stans, literacy rates are very high in native languages. Helps nothing but in radicalizing youth and in entrenching of cultural chauvinistic tendencies against women.

Usinitusi tafadhali hehehe.