Have you heard the English proverb I used for my title? The movie “Airplane” visualized it well. You set out to do something that seems simple, but even simple tasks usually involve hidden complexity. I mentioned before that developing countries are trying to convert their population growth into economic growth. That relationship is anything but simple; we can’t just claim that more people implies reduced labor costs implies rapid business growth. What are some of the barriers blocking nations from benefiting from more people? Here’s my superficial summary:
Being alive is not enough to be a potential laborer. In the United States, 66% of our population falls between the “working” ages of 15 and 64 (2013 statistics from the World Bank). In a few African nations (such as Somalia), this value is 50% or less, in some cases due to very low average life expectancy. With a young population, at large fraction of potential laborers are tied to child care rather than economic development, with unfortunate gender-specific effects. Adults will have different employment opportunities based on their education, and some countries, particularly those in East Asia, do a much better job than others in training their children. Naturally, losing citizens to war or incarceration will remove many people from the labor pool (did you know that the United States imprisons the second-highest fraction of national population in the world? We imprison 707 of every 100,000 people).
The health of the population is also essential to their ability to contribute to economic growth. The developing world produces public health statistics that should make the rest of the world cry. South Africa, for example, was home to 500,000 cases of active TB in 2011, and approximately two-thirds of that group must also deal with HIV infection (one of the perverse aspects of HIV/TB is that having one puts you at greater risk for the other, and the symptoms of each are worse in combination). One reason that a nation’s population may skew to younger ages is that many children die before reaching adulthood. Bill Gates noted that countries with high child mortality are also countries where couples produce larger numbers of offspring in hopes that at least some will make it to adulthood, leading to overpopulation. Nations need widely-applied vaccination programs to prevent childhood mortality, and more diseases need reliable vaccines.
Having available laborers, of course, is not sufficient by itself for business to thrive. Many have thought that the availability of capital was the limiting element for growth. The 2006 Nobel Peace Prize was awarded to Muhammad Yunus for his innovations in microfinancing. Non-profit organizations like Kiva.org have been created to make it easy for people to lend money to those with less for business or personal ventures. In recent years, though, these efforts have come under scrutiny; are microloans having the same effect on the developing world as payday loans for the poor in the United States, one where today’s debts lead to larger debts tomorrow?
Business regulation can also play a big role. If starting a new business requires a permit that takes six months to acquire, or half of an entrepreneur’s time is spent in paperwork, business growth will be held up. The World Bank ranks the United States as the seventh-easiest place in the world to run a business. The BRICS nations ranked 120th, 62nd, 142nd, 90th, and 43rd. Of course, the corrosive effects of governmental corruption are also hugely important. Abuse of power, secret dealings, and bribery add rust to creaking door hinges that need to open smoothly. Transparency.org evaluates the nature of corruption problems around the world, placing the United States as the 19th least corrupt nation (Denmark and New Zealand tied for least corrupt overall). Again, the developing economies of the BRICS were variable in performance; their ranks were 72, 127, 94, 80, and 72 (Brazil and South Africa tied in the rankings). Somalia took dishonors with the worst rank of 175. In South Africa, a new term has evolved to reflect the abuse of power (often through family relationships) to secure government “tenders” and contracts: The Star newspaper defines a tenderpreneur as “someone politically well-connected who has got rich through the government tendering system.”
Translating a nation’s population growth into economic growth requires quite a lot of a nation, where many different factors must point in the right direction all at once. As I noted above, the United States is also subject to these forces, and we could improve our lot by incarcerating less of our population (for example, by improving our transition programs for former prisoners or by breaking the School-to-Prison pipeline).
I am planning to move outside the United States this summer, and I am keeping in mind that many of the things that I have always assumed about government and business will not be true in my new home. The rest of the world is easy to visit for many Americans, but it is not so easy to call a new nation home. As they might have said in Rome, “Multa cadunt inter calicem supremaque labra!”