One of the defining stories of the second-half of the 20th century was the divide between developed (DC) and less-developed countries. Often dubbed the North-South rift, it basically pitted North Atlantic seaboard/hinterland countries, plus Australia, New Zealand, and Japan, against a long string of countries hugging the tropics, in Africa, Asia, and Latin America. Growth characterised the former group, by and large, while the latter swayed up and down the growth pole, with few making the move out of the developing bloc irreversibly (Chile, Malaysia, South Korea). That configuration seems set to change in the 21st century, but this transition will be costly to both groups, angling, as seems likely, towards a more mixed net outcome than the upwardly trending 20th century pattern in spite of the wide divide: developing countries then were largely starting from scratch, so had more to gain than lose, unlike now when DC losses can still mean net global losses. That component is set to change, but not the downward spiral.
So far in this century, the DC bloc has averaged below a 3.0 per cent growth rate, the worst was during the 2008-10 Global Recession, plunging to a negative -4.0 per cent. On the other hand, the developing bloc has averaged more than 2.0 per cent, almost always over 4.0 per cent and often doubling the DC average, with a 2007 peak of almost 8.0 per cent. That is not just a 20-year pattern, but in fact, can be extended backwards to capture the entire 1990s, with the developing bloc growth rate falling below the DC counterpart only during the 1997 Asian financial crisis, and only in that year, with a rough parity during 1998. A 30-year pattern cannot misdirect future projections by much. It marks a generational change that was so much aspired in the 20th century but remained evasive.
The bad news is that the DC bloc has played and run out of all its cards for a revival. There is not much more left in the stimulus tank for spending and investing without governmental involvement, while interest rates cannot be lowered any further than the ground-floor already dotting the industrial world. If we add to that stock-market fluctuations of a kind rarely witnessed in the second 20th century half, then "potential turmoil" is all one can honestly dub this century by. Any intentional or unwitting slip could blow the entire global economy.
That does not mean the developing bloc is making hay while the sun shines. Many countries in that bloc depend critically upon exports to the DC bloc, without which their own growth rates might mirror the DC bloc's. With their own relative growth, many of them cannot hide behind jacking commodity prices upwards: many primary commodities have been battered by the advent of synthetics (Bangladesh's jute, for instance); and although these artificial products, especially plastics, have reached an environmental tipping-point, meaning, the return to raw materials is receiving more priority just about everywhere. We need to wait another decade or so to measure any drifts on these fronts, but the environment has imposed a double-whammy: beyond the crusade against plastics, it has mobilised more DC bloc supporters than developing bloc members. China and India might be leading a developing bloc charge up the environmental consciousness pole, but this is barely a concern elsewhere where tangible, material possessions enjoy a zero-sum relationship with the environment.
Worse still is the impact of the unsteadily emergent Fourth Industrial Revolution (IR), based on artificial knowledge, therefore an automation threat universally feared. If low-wage production has been the developing bloc's driver, as largely holds up, so too is the waning of upper-level education levels necessary for Fourth IR adjustments in the DC bloc. Although the United States still remains the dominant Fourth IR platform, what with almost all of the necessary infrastructure in place (like research-based universities and testing grounds, capacity to mass-produce robots, drones, and the like, and the citadels of software education), many of the top-notched students getting trained and making names in these, happen to be foreign students, a whopping proportion from such developing countries as China and India.
That these two countries have begun challenging US Fourth IR prominence exposes the quandary we all face: the DC bloc seeking all the arenas of comparative advantage either gone or going, the developing group barely able to capitalise with newly-acquired competitiveness because of a host of mostly socio-political or socio-economic constraints, like the absence of appropriate research-and-development (R/D) structures, stubborn and thickening pollution, gender biases, significant poverty residuals, and the like, that the DC bloc has largely eliminated (albeit, this may be returning given economic stagnation elsewhere).
Packages like these predict turmoil. We have been witnessing the opening round of skirmishes illustrating embedded and enlarged confusion. At the top of the pecking order, the United States wants to retreat from a world it believes has not treated it fairly after all it did for many in that group since World War II: this is evident in its sparring bouts with both Canada and Mexico along its borders, but also against West European countries and the North Atlantic Treaty Organisation (NATO); while West European countries are themselves coming apart, given the Brexit stalemate. Japan faces a demographic nosedive just when it needs an expanding population, and Australia might have become the noisiest DC bloc-member fighting Islamic jihadis in and across the Middle East outside the United States. All of them face populism of sorts that no political leader dares campaign against. As the dust settles as to why suddenly these widespread anger-expressions are happening so simultaneously, the culprit increasingly looks like the loss of economic competitiveness that no one believed would ever hit these countries, at least not for so long, and not only that, but also finding them without a Plan B.
Where there is a score to settle in the growth-infected developing bloc, no effort is being spared to get it done. China has garrisoned more Muslims than any other country, and persecuted them more unabashedly than US bombings across Syria, or NATO air-raids in Libya have done to civilians. India is not far behind. Its Hindu nationalists directly threaten all minorities within, while external enemies have been alerted they will not be spared. Other high-growth countries have their own idiosyncratic problems: refugees diverting Bangladesh's strides, elections derailing the status quo, as in Malaysia, or authoritarianism either recalibrating, as in Cambodia, Myanmar, the Philippines, and Sri Lanka, or diving off the deep end, as in Saudi Arabia.
A vulnerable world awaits a call, any call, standing as helpless as at any time in living memory. As a half-empty glass stares just about every country under the sun, those who interpret the malaise differently (that is, adopt the half-full view), will continue reaping the Fourth IR harvests and windfalls, in turn widening the domestic have-have not schism. It may perhaps be the group in-between that gets hurt the most: the surging middle classes, especially in developing countries, who have climbed the social ladder but suddenly find the staircase disappearing; and their sinking DC counterparts because they fiddled while their competitive capacities burned away. Any glass to them might be insulting: if half-full, they could easily ask, where their share lies; and if half-empty, they will resist being looked down upon.
Tables may be turning between countries, but they are also turning away the beneficiaries, defaulters, and losers from their lines of duty. A neo-liberal order does not provide the right playground where growth rates can be better nourished. Without governmental controls, we have shown we are incapable of digesting our cookies.
Dr. Imtiaz A. Hussain is Professor & Head of the Department of Global Studies & Governance at Independent University, Bangladesh.
