Name calling in classifying world economy

By Kollengode S Venkataraman (October 2006)

In the post-World War-II years, the industrialized West classified nations into three camps using highly prejudicial terms simply because it fitted its perception. The First World comprised of themselves — the industrialized West — led by the US followed by Western Europe, Canada, Australia, New Zealand. Later, Japan was included in this list. The Second World was of course the communist Soviet Union, China, and their allies, mostly in Eastern Europe. Everyone else was put in the derogatory “Third World” basket. Even the European-educated intellectual and the political class of the “Third World” meekly accepted this derogation.

Then, Taiwan, South Korea, Singapore, Malaysia, and Thailand became economically strong, better than others in the “Third World” even as they became totalitarian and politically repressive. The West, particularly the US, kept its eyes closed to the political repression simply because these countries were also anti-Communist. Abstract ideology can be sacrificed at the altar of practical politics.

So, the West started differentiating these countries using increasingly value-neutral terms such as Pacific Rim Countries or better still, pandering phrases, Asian Tigers, for example.India was still a Third World nation having a slow “Hindu rate” of growth of 2 to 3% on the GDP.

Many sophisticated economists (such as Patrick Moynihan and John Kenneth Galbraith) realized the number-based classification of the economies of the world, which implies rank, was steeped in arrogance besides being crude and primitive. So, a softer term, “Developing Countries,” came into circulation. In this “Developing Countries” basket came countries as diverse as those in the Indian subcontinent, Central and South America, most of Africa excluding of course, South Africa ruled by the White minority under the apartheid . This euphemistic evolution in coining terms was an improvement, even though it still reeked of condescension.

And then, in the 1980s, the Second World destroyed itself as the Soviet Union imploded. So, to be politically and socially correct, another alliterative term, “Emerging Economies,” came into being. With Indian software warm-bodies solving the highly exaggerated Y2K problems in late 90s at tenth of what it would cost to get it done in the First World, India overnight became a leading member of the Emerging Economies.

Now that people of Indian origin have done well professionally in engineering, healthcare, university teaching, IT, hospitality business, and entertainment all over the world, the alliterative “Emerging Economies” became somewhat out of date similar to calling Sri Lanka as Ceylon, or Myanmar by its old name Burma. Because, as professionals, Indians have already “emerged,” even though India has not.

The latest buzzword (coined by Goldman Sachs) is BRIC nations,
referring to Brazil, Russia, India, and China. This is better since it at least identifies the nations by their names instead of describing them using condescending terms (Third World and Emerging Economies), obviously describing the world from the point of view of the powerful.

According to Goldman Sachs 2003 report (Global Economies, Paper No. 99, October 1, 2003), in the next five decades, if the BRIC nations focus on the improving their fundamentals, they will grow to be bigger than the economies of the G-6 (US, Japan, Germany, France, UK, Canada) even in terms of dollars (or Euros).

By 2025, the BRIC nations’ combined GDP would be half of the G-6. Besides, by that time, with the very low birthrates in the G-6 nations, their population would be more geriatric, while the BRIC nations would have a younger and more productive workforce. Even if Goldman-Sachs’ projections are not fully realized, it will be still quite impressive.

I read somewhere that in the pre-Industrial Revolution World, China and India combined accounted for over 40% of the world GDP. After over 300 years of Europe’s political colonization and economic exploitation of the rest of the world, finally, newer counter-balancing power centers may be emerging that will usher in new World Order in political, economic, military, and social terms.

But there are many pointers that this new World Order will be very different from what the First World envisioned when the Berlin Wall was brought down and the Second World imploded. — END


  1. No comments yet.

You must be logged in to post a comment.