The Pace of a Countrys Economic Growth - Term Paper Example

?The pace of a country’s economic growth can be better explained by the policy choices of its leaders than underlying structural conditions Introduction Economic growth of a country fundamentally depends upon the strategies and policy choices of its leaders. Most of the countries around the world, that have shown rapid economic progress, have achieved this progress usually during the reign of a single leader e.g. Dubai’s economic growth in particular and that of the UAE’s in general primarily happened in the past three to four decades which was the reign of Sheikh Mohammed bin Rashid Al Maktoum and his father. Other countries like the US have been fortunate to have a series of good leaders to take the country to the apogee of technological advancement and economic growth where they are today. History provides many examples of such countries and their leaders that have played a fundamental role in their economic growth and have brought a radical change in the nations’ fortunes. The decade following the new millennium’s turn is marked by the BRICS countries’ emergence and economic empowerment. These countries include “Brazil, the Russian Federation, India, China and South Africa—which have come to account for a significant share of economic growth, demand expansion, industrial production and wealth creation in today’s world” (“Structural Change, Poverty” III). These regional economic powers’ success in the achievement of sustained growth of economy serves as a point of reference for other developing countries to emulate as well as for the advanced counrties to regain the dynamism of economy. The pace of a country’s economic growth can be better explained by the policy choices of its leaders than underlying structural conditions, and China provides a potential example of that. Policy choices of leaders and their impact on economic growth: the case study of China China has transformed its approach of being reluctant to an aggressive litigant in the dispute resolution activities in the WTO contrary to the conservative approach it has adopted in the WTO negotiations. An in-depth analysis of China’s policy over the past few decades suggests that the country has gone through three phases that have transformed it from a rule-taking country to the rule-making country in the international affairs. The three phases are discussed as follows: Rule taking phase China’s leaders have been very cautious in litigation of WTO since the country’s accession in 2006. Owing to its lack of familiarity with WTO’s legal rules in the capacity of a newcomer, China placed emphasis upon grabbing the rules rather than winning any disputes. Aimed at avoiding litigation, the Chinese leaders would settle the disputes with the complainants immediately after the cases were filed even if they were capable of using good arguments to defend their position. An example of this is the settlement of the dispute within four months when in March 2004, the US wanted to consult about a matter involving value-added tax’s rebate over integrated circuits (Gao). Likewise, the government of China announced to scrap the Duties of Anti-dumping within three days of the complaint raised by the US about China’s lack of consistence with the Anti-dumping Agreement in the case of Kraft Linerboard in the year 2005 (Nakagawa 48). China’s eagerness to settle the disputes and flexibility of attitude reflect the country’s presence in the rule taking phase in the start of the 21st century. Rule shaking phase Chinese leaders resolved to develop a better understanding of the dispute settlement process by actively participating as a third party in real WTO cases. For instance, China was present as a third party in nearly every panel between 2003 and 2006 (Birkbeck 168). The improved confidence reflects from the answer of Bo Xilai, the Minister of MOFCOM when he was asked if there was any intention of complaining against the countries that were limiting the textile exports of China in the WTO, “First, China has the right to resort to WTO dispute settlement mechanism. We should not hesitate to use this right when needed. Second, while bilateral consultation has its own benefits, if each side sticks to its own view, the problem won’t be solved as there is no neutral arbiter. Thus, in addition to one-to-one consultations, sometimes it’s more effective to have the disputes reviewed in the multilateral setting. Third, the restrictions against Chinese products are inconsistent with WTO rules and discriminatory.” (Xilia cited in Birkbeck 169). China took a radical step ahead to enter the rule shaking phase in March 2006 when Canada, the US, and the EU raised a combined complaint about Auto Parts against China (Cooney 17). China fought the case rather than submitting to the complainants like it used to do before. Similarly the Chinese leaders fought other cases like the TRIPS case and the Publications and Audiovisual Products case, thus shaking the rules governing trade in the international system. Rule making phase China had to accept some harsh terms as a price paid for being accessed to WTO. China may face challenges in using the process of multilateral negotiation to alter these harsh terms. This left the Chinese leaders with one option only; to challenge the prevailing rules and minimize their negative effects by interpreting them creatively in the dispute settlement proceedings in WTO. Since September 2008, Chinese leaders have filed five cases of which, four aimed at changing the prevailing rules in general and the Accession Protocol of China in particular (Gao). This transition of China from a rule taker to a rule maker has given the country huge significance and importance in the international trade system and has remarkably improved the country’s economy, thus making it one of the fastest developing countries in the world in the present age. Structural conditions of China In spite of the fast pace at which China’s economic power has grown, the country’s structural conditions are not very favorable. “Most of the threats the Chinese see to their country come from within. For three decades China has depended on robust growth, largely from ever-increasing exports, to maintain high levels of employment and raise living standards, thereby assuring social tranquility” (Haass). China is heavily criticized for its poor performance with respect to the environmental health and safety. China’s leaders are aware of the growing problem of pollution in their country and the fact that their policies on environmental health and safety are tarnishing the country’s image in the international scenario, and they are taking measures to improve their performance in this respect as well, yet this is certainly not one of their top priorities currently as it does not substantially contribute to the economic growth of the country. In fact, for the most part, the economic growth of China has happened as a result of rapid industrialization, manufacturing and growing export that has had a negative impact on the environment. If China is analyzed with respect to the socioeconomic conditions of its people, the country does not provide a very satisfying scenario. The infrastructure of the country is poor and a considerable population of the country lives in poverty. The case study of Dubai The economic growth of the UAE can fundamentally be attributed to the policy choices made by Sheikh Rashid and his son Sheikh Muhammad. Sheikh Rashid announced a committee’s formation on 25 August 1977 to make Dubai an aviation hub internationally. One of the most remarkable achievements of Sheikh Muhammad is transformation of Dubai into a spot for tourist attraction. To achieve this, Sheikh Muhammad made use of the “open skies” policy and laid the foundations of the rapidly flourishing tourist industry in Dubai during the 1990s. In addition to that, “Sheikh Mohammed under-carried Dubai’s oil file, and this was one of the most serious tasks in Dubai Government as oil export was the most significant economic pillar” (“Sheikh Mohammed”). The structural conditions of Dubai improved as a result of its economic empowerment and development as a financial hub. Conclusion An in-depth analysis of the policy choices of the leaders of China over the past few decades suggests that for the most part, the country’s economic growth has resulted from the strategic planning and prudent policy choices made by its leaders. Even though China’s structural conditions are not very safe, stable, and healthy, yet the country has grown so rapidly in terms of economy that today China is one of the fastest growing economies in the world. Similarly, the rapid economic growth of Dubai and the whole UAE in general can be attributed mainly to the right policy choices made by the leaders. Other examples of such countries that have rapidly progressed in economic power but have poor structural conditions include Brazil and India, both of which have a considerable population of extremely poor people, have poor infrastructures in numerous areas, and are dealing with various socioeconomic and political challenges and yet have shown rapid economic growth over the past few decades. This leads to the conclusion that the pace of a country’s economic growth can be better explained by the policy choices of its leaders than underlying structural conditions. Works Cited: Birkbeck, Carolyn D. Making Global Trade Governance Work for Development: Perspectives and Priorities from Developing Countries. Cambridge University Press, 2011. Print. Cooney, Stephen. China's Impact on the U. S. Automotive Industry. Congressional Research Service, 2006. Print. Gao, Henry S. “China’s Ascent in Global Trade Governance: From Rule Taker to Rule Shaker, and Maybe Rule Maker?” 10 July 2010. Web. 16 April 2013. . Haass, Richard N. “China's Greatest Threat Is Internal.” Council on Foreign Relations. 28 Dec. 2011. Web. 16 April 2013. . Nakagawa, Junju. Anti-dumping Laws and Practices of the New Users. UK: Cambridge University Press, 2007. Print. “Sheikh Mohammed bin Rashid Al Maktoum.” 2013. Web. 16 April 2013. . “Structural Change, Poverty Reduction and Industrial Policy in the BRICS.” 2012. Web. 16 April 2013. . Read More