Economists and policymakers are aware of what developing economies need in order to grow, but they do not necessarily know how to make it happen Egypt could have a chance of joining a group of 13 economies singled out by the Commission on Growth and Development as able to sustain high rates of long-term growth. That chance, said Mahmoud Mohieldin, minister of investment, depends on it following five principles the commission found common amongst the 13 economies. Mohieldin was addressing a workshop where the Arabic version of "The Growth Report: Strategies for Sustained Growth and Inclusive Development" was launched. Niveen Wahish attended. The Commission on Growth and Development brings together 20 leaders mostly from developing countries and two academics. The workshop also reviewed an updated version of the report, addressing "Post-Crisis Growth in Developing Countries". While Egypt may not be on the list of 13 yet, Mohieldin said the good thing is that it is not on another longer list of developing economies that as a result of the global financial crisis are exposed to an increased risk of poverty. The 13 growth economies -- namely Botswana, Brazil, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Malta, Oman, Singapore, Taiwan and Thailand -- have maintained growth rates of seven per cent or higher for 25 years or longer. They are found to have five buzzwords in common: openness, macroeconomic stability, future orientation, market orientation and strong leadership and governance. India, Vietnam and South Africa, said Mohieldin, are candidates along with Egypt to join this group. But growth, as the authors of the report underlined, "is not the endgame in itself, but a prerequisite for economic welfare," according to Commission Vice-Chair Danny Leipziger. Growth is necessary to lift people from poverty and make available the resources needed to provide healthcare, education and other development goals. The report said the 13 role model economies fully exploited opportunities in the world economy: notably they imported ideas, knowhow, and technology. At the same time, they produced goods that met global demand. These countries also "maintained macroeconomic stability, keeping a grip on inflation and did not stray down unsustainable fiscal paths". Additionally, they "mustered high rates of investment, including public investment, financed by equally impressive rates of domestic savings." These economies also "paid due respect to market signals", although "in some cases, governments bent the law of comparative advantage, by favouring some industries over others. But even in these cases, the favoured industries had to pass a market test by successfully exporting their products." Governments recognised their duty to protect laid-off workers from economic misfortune, but "they felt no obligation to preserve unviable industries, companies or jobs." The 13 economies also had in common committed, credible and capable governments. Strong leadership, the report said, must choose a growth strategy, inform the public of their target, and convince people that the harvest deserves effort. Leaders will not succeed unless their promises are believable and do not leave anyone out. But while the report says it is easy to identify the characteristics that led to continued high growth in the 13 top developing economies, it is harder to know how to replicate that experience elsewhere. In fact, Leipziger told workshop participants, "The growth in 13 countries was a rare occurrence. No one factor will get you that growth; you have to have a lot of things aligned to achieve this success." The authors of the report underlined that the experience of each country will reflect its own growth strategy. Each country sets its own priorities. The report also listed what it called "bad ideas", which developing countries should steer clear of. These include subsidies for energy, low wages for civil servants, the lack of promotion based on merit, and focussing on quantity rather than quality and depth of education. The updated version of the report added to the list of bad ideas. It warned against "continuing with energy subsidies on the assumption that commodity prices will not rebound after the crisis." It also warned against the adoption of "counter-cyclical fiscal policies without concern for the returns on public spending and without a plan to restore the public finances to a sustainable path over time, once the crisis is past." Further, the report warned against "abandoning the outward looking, market driven growth strategy because of financial failures in advanced countries," as well as "interpreting the need for better regulation and government oversight of the financial sector as a reason for micromanagement of the financial sector." Although the report's authors kept their recommendations largely unchanged following the global crisis, they acknowledged that their strategy "may not be as rewarding as it was in the years before the crisis."
