Importance of the developing world

Even though the recent crisis has affected the upliftment of poverty ridden people towards giving them a better life, the transition is still happening, even if slower than the crisis free scenario.

The global economic crisis will continue to affect the long term development prospects well beyond 2015 in terms of slowing down the momentum of achieving Millennium Development Goals (MDGs), says the Global Monitoring Report 2010 released by the World Bank and International Monetary Fund. The crisis has slowed the pace of the poverty reduction in developing countries but the number of poor in India is still falling, says the report. As a result, 53 million more people will stay in extreme poverty in 2015 who otherwise would have been brought out of it. Similar trend is expected with other MDGs related to hunger, child and maternal health, water and health issues and sanitation.

This positive transition of reduction in poverty levels in India (unlike the west, where the poverty reduction rate is way too less) shows that the country is still on the positive growth path, although slowed at pace for the time being. Not only countries like India and China have shown positive growth rates during the recession reducing the respective poverty levels, but their markets have provided bases for the development of other low incoming countries.

The lead author of the report Delfin Go stressed on the importance of the developing countries in achieving the MGDs. Focusing on the importance of recovery of developing economies he said, ” the recovery of growth in developing countries will provide stimulus and a market for high income countries.”

This signifies that the role of developing economies like India and China is crucial for the revival of the world economy. These two countries not only provide a huge pool of capable population which can act as a massive force to achieve the necessary growth target, but also have been playing a major role in growths of the other low income nations. Here is the overview of the book by Andres Oppenheimer which talks about how growth in India and China is positive for Latin America.

Indian enterprises, who have achieved high level of success and growth in the country are taking interests in the other developing markets. Not only they see huge potential in those markets in the form of promising business opportunities, but such expansion provides better options to the residents of those low income nations in terms of better and cheaper products, employment etc. A recent example of that is Bharti Airtel’s foray in African market. Every business might not be truly replicated to other developing markets but the lessons learnt in a country as diverse and big as India certainly come in handy for these organizations to formulate their strategies for the expansion. There are millions of success stories.

China, I think needs to re-conceive some of their policy structures and administrative hoods if it wants to come out as the world’s biggest economy. The country’s general mentality, I believe, is similar to the Indian diaspora and will provide immense growth opportunities for both the nations should they decide to get united in terms of providing assistance, better access to each other’s markets and resources.

I sincerely agree with Delfin Go in stressing the crucial part that the developing world will be playing in affecting the world economy in the coming future.

Note: This article was written by Pankaj Agarwal, student participant of the 13th World Business Dialogue.  The original post can be seen at his blog.