fwdk speech smallFor the past 60 years one of the main preoccupations of well-meaning people and organisations in the West has been their concern over Third World poverty and their determination to promote a more equal distribution of planetary wealth.

The vehicle they usually chose to achieve this worthy goal was foreign aid.

Developed countries set themselves a foreign aid target of 0.7% of GDP and – over the decades – channelled hundreds of billions of dollars to Third World countries. In general the results of foreign aid were disappointing – and in some instances were clearly counter-productive.

Too often, foreign aid created a culture of dependency in recipient governments. In 2003 official development aid accounted for a whopping 18.6% of sub-Saharan Africa’s GDP and represented, for example, more than half the total Tanzanian budget. Foreign funds were frequently siphoned off by ruling elites and ironically landed back in bank accounts in Europe.

It transpires that much more beneficial outcomes could have been achieved if Western countries – instead of channelling aid to developing countries – had simply suspended the enormous subsidies that they paid to their own farmers. Western agricultural subsidies amounted to US $356 billion per annum during the early years of the new millennium compared with foreign aid flows of only US $60 billion. The subsidies frequently made it impossible for farmers in Asia, Latin America and Africa to compete in the one area where they had an advantage: in agricultural production.

Nevertheless – and for quite different reasons – there have been enormous shifts in the distribution of planetary wealth during the past 35 years.

Much of this change has been brought about – not by the West and foreign aid – but by the phenomenal growth of what are termed ‘emerging markets’.

There is no generally accepted definition of exactly what emerging markets are and which countries qualify to be included in their number. In general, they comprise the principal countries in the world that have in recent decades progressed from repressive or moribund economic systems to achieve significantly higher growth rates.

The 15 countries most generally included in the lists of emerging economies are: Brazil, Chile, China, Colombia, Egypt, India, Indonesia, Malaysia, Mexico, Peru, the Philippines, the Russian Federation, my own country – South Africa, Thailand and Turkey.

These countries comprise 53% of the world’s population and nearly all of them have experienced impressive growth during the past three decades.

At the core of the emerging markets are the so-called BRICS countries – Brazil, Russia, India, China and South Africa. Together they comprise 42% of the world’s population and 21% of global GDP.

In 1980 the 15 emerging markets countries listed above accounted for only 15.5% of world GDP – compared with the 25.6% share of the United States and the 34.6% share of the European Union.

Today, they produce 27.6% of the world’s GDP – while the shares of the United States and the EU have fallen to 22.2% and 23.7% respectively. The big winner has been the emerging markets and the big loser has been the EU – despite its significant expansion since 1980.

All this has had a very positive impact on the lives of billions of people.

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