“For Poor Countries, China Is No Model” by D. Moyo Essay (Article)

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Dambisa Moyo dismisses China’s model of economic growth, which is mainly state-centered. Moyo asserts that it is a model, which poor countries should not emulate because its long-term consequences could be detrimental. Nevertheless, several governments have adopted the China model to control the growing discontent in the public. It is taking them backward with possibly dire consequences for the global economy.

The sheer size of emerging economies, which include the so-called BRICs but also other countries, implies that their economic activities could jolt “equity and bond markets, shift foreign exchange rates, bump commodity prices, alter global trade and shape corporate investment decisions” (Moyo). Hence, it is imperative to understand their model of growth.

Emerging economies have diverse politics and culture. Nevertheless, the main cause of unrest in these countries emanates from a noticeably similar set of entrenched economic woes: “low growth, stubborn poverty, stagnant wages and intractable unemployment rates that cut off millions from work and any real prospects of progress for themselves and their families” (Moyo). While at least an economic growth rate of seven percent is necessary to increase individual incomes and make significant changes in poverty eradication, many emerging economies will not register such a rate.

As citizens clamor for progress, many governments have turned to policies that could hinder economic growth and start more turmoil in the end. For instance, restrictive “tariffs, quotas, export bans, and even absolute confiscation” (Moyo) have already started to inhibit world trade growth. Besides, protectionist activities in emerging economies have affected foreign capital flows. Moyo notes that the flow of money has declined within the past decade by nearly 70% among the G-20 economies.

In emerging economies, states have founded increased roles. In most cases, governments control critical energy sectors in emerging economies. Other countries have quickly focused on adopting the China model and implementing policies that favor short-term outcomes. China has demonstrated remarkable growth under capitalism. On the other hand, capitalism and democracy have experienced several sets of challenges such as high rates of income inequality and growing government interference.

While China’s growth remains unquestionable, its model may not be a viable option as many emerging economies tend to think (Moyo). First, China depends on exports to drive its growth, which is mainly favored by the free market economies of the West. On the other hand, many emerging economies depend on agricultural commodities for growth. The West influences such produce by domestic subsidies.

Second, a model that relies on the government is ineffective because of interference with the market activities. That is when the state is the final economic arbiter, products, and services loss their real market values. This situation inhibits sustained long-term economic growth. It results in a disparity in market activities, which could cause price increases and alter interest rates (Moyo).

Finally, the China model may result in short-term service provision, but with severe negative externalities and inefficiency because of monopolistic tendencies and taxation regimes (Moyo). In the case of China, for instance, the country is currently dealing with severe pollution, huge debts, and a possible real estate bubble burst (Moyo). These factors have slowed their economic progress.

Governments in developing countries progressively consider economic development as a precondition for democracy, but this is a worrying trend. As they face continued public unrest, emerging economies see an authoritarian, state-controlled model as a solution to their problems. While the China model could provide short-term political appeal, it is most likely to create social unrest and affect the global market in the end.

Dambisa Moyo dismisses China’s model of economic growth, which is mainly state-centered. Moyo asserts that it is a model, which poor countries should not emulate because its long-term consequences could be detrimental. Nevertheless, several governments have adopted the China model to control the growing discontent in the public. It is taking them backward with possibly dire consequences for the global economy.

The sheer size of emerging economies, which include the so-called BRICs but also other countries, implies that their economic activities could jolt “equity and bond markets, shift foreign exchange rates, bump commodity prices, alter global trade and shape corporate investment decisions” (Moyo). Hence, it is imperative to understand their model of growth.

Emerging economies have diverse politics and culture. Nevertheless, the main cause of unrest in these countries emanates from a noticeably similar set of entrenched economic woes: “low growth, stubborn poverty, stagnant wages and intractable unemployment rates that cut off millions from work and any real prospects of progress for themselves and their families” (Moyo). While at least an economic growth rate of seven percent is necessary to increase individual incomes and make significant changes in poverty eradication, many emerging economies will not register such a rate.

As citizens clamor for progress, many governments have turned to policies that could hinder economic growth and start more turmoil in the end. For instance, restrictive “tariffs, quotas, export bans, and even absolute confiscation” (Moyo) have already started to inhibit world trade growth. Besides, protectionist activities in emerging economies have affected foreign capital flows. Moyo notes that the flow of money has declined within the past decade by nearly 70% among the G-20 economies.

In emerging economies, states have founded increased roles. In most cases, governments control critical energy sectors in emerging economies. Other countries have quickly focused on adopting the China model and implementing policies that favor short-term outcomes. China has demonstrated remarkable growth under capitalism. On the other hand, capitalism and democracy have experienced several sets of challenges such as high rates of income inequality and growing government interference.

While China’s growth remains unquestionable, its model may not be a viable option as many emerging economies tend to think (Moyo). First, China depends on exports to drive its growth, which is mainly favored by the free market economies of the West. On the other hand, many emerging economies depend on agricultural commodities for growth. The West influences such produce by domestic subsidies.

Second, a model that relies on the government is ineffective because of interference with the market activities. That is when the state is the final economic arbiter, products, and services loss their real market values. This situation inhibits sustained long-term economic growth. It results in a disparity in market activities, which could cause price increases and alter interest rates (Moyo).

Finally, the China model may result in short-term service provision, but with severe negative externalities and inefficiency because of monopolistic tendencies and taxation regimes (Moyo). In the case of China, for instance, the country is currently dealing with severe pollution, huge debts, and a possible real estate bubble burst (Moyo). These factors have slowed their economic progress.

Governments in developing countries progressively consider economic development as a precondition for democracy, but this is a worrying trend. As they face continued public unrest, emerging economies see an authoritarian, state-controlled model as a solution to their problems. While the China model could provide short-term political appeal, it is most likely to create social unrest and affect the global market in the end.

Works Cited

Moyo, Dambisa. The Wall Street Journal. 2014. Web.

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