Dr. Wolassa Kumo
1. Introduction

By early 1950s, based on the level of economic development and geopolitical alignment, the World was divided into three Worlds: The First World, the industrialised, capitalist, countries of North America, western Europe, Japan and Australia under the United States’ sphere of political influence; the Second World, the former Soviet Union, the socialist counties of Eastern Europe, and China; and the Third World, Africa, Latin America and the rest of Asia and Middle East. For about 4 decades until 1991 the first two worlds had engaged in Cold War with military tensions, arms race, proxy wars, and economic and technological competitions. The Third World was mostly a battle ground for proxy wars between the first two worlds.

This global politico ? economic order was fundamentally altered following the 1989 revolutions in Eastern Europe that overthrew socialist governments and forced the Soviet Union to withdraw its forces. The collapse of communism in Eastern Europe was followed by the collapse of the Soviet Union itself and the creation of 15 independent states in Eastern Europe and Central Asia. Following this, socialism also collapsed in less developed countries of Ethiopia, Cambodia and Mongolia.

With the end of the Second World, the concepts of the First and the Third Worlds became irrelevant. At present the world can be categorised into three economic zones: a) Advanced, industrialised countries (which includes all of the former First world countries); b) Emerging Market Economies,(rapidly expanding economies of China, Russia, Brazil, India, South Africa, Argentina ,Mexico, South Korea, and Indonesia); and c) Lesser-developed countries mostly in Africa and also in Asia and Latin America.

The next three decades will see major changes in world economic order with emerging markets poised to take over as global economic leaders. The following sections of this brief article investigate the trends in global labour and total factor productivity as engines driving rapid changes in global economic order.

2. Global output growth during the past 60 years

In 1950 the total GDP of India converted at Geary Khamis (GK) [1] PPPs in 1990 US dollar prices was US$ 222 billion, bigger than that of Japan (US $ 160.9 billion), France (US$220 billion), West Germany (US213.9 billion) and China (US$198.6 billion) all at constant 1990 prices. In terms of the size of total output, six decades ago, India was the third largest economy in the World after USA with total GDP at Geary Khamis PPP of US$ 1,455 billion, and United kingdom with total GDP of US $ 347.8 billion (of course excluding the former USSR with the total GDP of over US$ 510 billion) all at the 1990 prices.

During the next three decades the global economy expanded remarkably but at different paces in different major economies. By 1980 India’s total GDP nearly tripled to over US$ 637 billion while that of China grew more than four times to US$805.8 billion. During the same period, the total GDP of Japan grew almost ten times to over US$1,568 billion.

On the other hand, the total output of United States grew only three times to about US$4230 billion over the same period while the UK total output only doubled during the three decades between 1950 and 1980. Western Germany’s total output expanded by nearly four and one half times to US$946 billion while French total output expanded only three and one half times during the same period.

In fact, Japan’s total output exceeded that of each of India and China within a decade and one half after WWII while it exceeded that of each of UK and West Germany by mid 1960s. Therefore, by late 1960s Japan and West Germany emerged as the second and third world economic powers respectively after the United Sates.

However, growth trends for the next three decades ending in 2009 decelerated for most advanced economies. At the 1990 constant PPP prices, the US total output expanded only slightly more than 2 times at the end of 2009 from its 1980 level while that of Japan expanded only by 1.7 times for the same period. Similarly, total output in UK, Germany, and France expanded by less than 2 times during this period.

On the other hand, Chinese total output expanded nearly 11 times while that of India expanded five and one half times during the 1980-2009 period. Clearly, the growth moment started to decline in advanced economies since the early 1980s while it started to pick up in the current emerging market economies such as India, China, Brazil and later the Russian federation.

Based on the Geary Khamis PPPs at 1990 constant prices, in January 2010, China and India have become the second and third largest economies in the world respectively after the United States while Russia and Brazil are catching up with the UK and France. Japan and Germany are fourth and fifth largest economies in the world respectively.

Such rapid growth in some emerging market economies since the 1980s is attributed primarily to continuous improvements in labour and total factor productivity.

3. Labour and total factor productivity

The expansion of total output at any given point in time is strongly positively associated with the growth in labour and total factor productivity. For instance, the total output per person employed in the United States grew 1.7 times during the 1950-1980 period but only 1.5 times during the 1980-2009 period. Output per person employed expanded 3 times in France during 1950-1980 but only about 1.5 times during the 1980-2009 period while in UK there was no major difference in growth of output per employed person during the two periods.. In Japan output per employed person expanded six times during the 1950-80 period but only 1.6 times during the slow growth periods of 1980-2009. Thus, the rapid expansion in total output in advanced economies during the 1950-1980 period was directly linked with the rapid expansion in contribution of labour.

Then opposite is true for most emerging market economies. The, total output per employed person grew only by about 1.6 times in China during 1950-1980 but rapidly accelerated during the 1980-2009 period to about seven times. In India output per employed persons expanded only 1.3 times during the 1950-1980 period but it expanded 3 times during the 1980-2009 period. Thus the first three decades following the end of WWII, saw rapid growth in labour productivity in advanced economies while the past three decades since 1980 saw a sharp decline in labour productivity. This was accompanies by rapid growth in labour productivity in emerging market economies during the past three decades.

In spite of rapid growth in labour productivity in emerging market economies during the past three decades, in absolute terms, labour productivity in these economies is still lower than those of the advanced economies. The United States is still a world leader in total output/labour ratio. The GDP per persons employed in the United States in 2009 is the highest in the world, at about GK $ 66000 followed by Ireland GK$55000, Luxemburg GK$52000 and Norway GK$51000 all at the 1990 constant GK dollars.

Among the BRICs Russia leads in output per person employed in 2009 at about GK$18000 followed by Brazil, GK $ 13000 and China GK $ 11000 and India GK$ 7000, at 1990 constant GK dollars.

Labour productivity performance is critical for economic growth but its effect is usually short term. . The long term economic performance depends on total factor productivity (TFP) which reflects a country’s ability to use a broad range of skills, including its public policies and infrastructural development to improve living standards [2]. The TFP growth accounts for the changes in output not caused by changes in inputs. Its growth represents the effect of technological change, efficiency improvements, and our inability to measure the contribution of all other inputs. It is estimated as the residual by subtracting the sum of two-period average compensation share weighted input growth rates from the output growth rate as log differences of level which are known as Tornqvist indexes[1].

Rich countries are facing an increasing challenge from emerging economies not only in terms of labour productivity bus also in terms of total factor productivity .The growth in total factor productivity in most advanced economies between 1982 and 2008 measured as percent of Tornqvist index was mostly negative and marginal. For instance, between 1982 and 2008 total factor productivity in the United States grew only by 0.35 percent per year on average while in Japan it grew only by about 0.18 percent per year on average.

On the other hand, TFP grew much higher in emerging market economies. For instance, TFP grew by about 1.98 percent per year on average in China, and 0.87 percent in India for the period 1982- 2008 and by over 4 percent in Russia for the period 1995 – 2008.

It can be argued therefore that the 2008-2009 global financial crisis and the ensuing Great recession were not merely the result of short term bad bank behaviour, but the result of long term decline in total factor productivity in developed economies. Most of the developed economies have shown persistent trend of decline over the past thirty years while emerging economies have shown persistent sign of improvement in productivity and economic growth. The economic resilience of the emerging market economies during the 2008-2009 Great recession is the proof of their long term economic rigour.

4. The changing global economic order

Economist are predicting that during the next there decades the world economic order will change drastically and that China will take over United States as the world economic superpower. Robert Fogel [3], the winner of the 1993 Nobel Prize in Economic Sciences, argues that in 2040, the Chinese economy will reach $123 trillion, or nearly three times the economic output of the entire globe in 2000. He states further that China’s per capita income will hit $85,000, more than double the forecast for the European Union, and also much higher than that of India and Japan. Fogel forecasts further that although China will not overtake the United States in per capita wealth, its share of global GDP of 40 percent will be more than 3 times that of USA and more than 8 times that of the European Union after three decades.

The basic factors contributing to China’s faster economic expansion are: enormous investment in education leading to rapid increases in productivity; the continued role of the massive rural sector; currently underestimated economic progress; locally driven reforms and more open criticism than most think; and rapidly expanding consumerism tendencies [3].
The main factors for the relative decline of the European union will be declining fertility and consumer restraints.

However, not everyone shares such optimistic view about China’s economic future. Gordon Chang [4] argues that China will not achieve such massive expansion during the coming three decades. He argues that although China is making record investment in education, its education remains inappropriate for modern society. He further stresses that although China still has cheap labour, there is generally accepted projection that its labour force will level off in a half decade and then shrink.

Chang argues further that in spite of Fogel’s observations, Chinese communist party tolerates less criticism today than it did two decades ago and that economic reforms have stalled because China has progressed as far as it can within the existing political framework. He reiterates that a true market economy requires a rule of law, which in turn requires institutional curbs on government.

Chang rejects Fogel’s view on the role of consumer spending in China. He argues that historically, private consumption in China contributed about 60% of economic output; today it accounts for about 30% as the bulk of growth is driven by government’s massive investment on infrastructure. Change observes further that as much as Europe faces demographic challenges so does China; Chinese statistics show that the country’s birthrate fell 42 percent from 1990 to 2007, and government projections suggest that by 2025, nearly a quarter of China’s population will have celebrated its 60th birthday.

Finally, Chang states that China’s 1.4 trillion people will not earn a per capita income of US$85000 in 2040 for the main reason that the Earth cannot sustain such rapid growth, a clear reminder about China’s responsibility to curb carbon emissions to a sustainable level.

However, only time will tell whether Fogel or Chang will have accurately predicted the future state of the Chinese economy and hence the emergent global economic order.

References

[1] The Conference Board Total Economy Database, January 2010, http://www.conference-board.org/economics/database.cfm

[2] Finfacts Ireland, Business and Finance Portal, 2010: http://www.finfacts.ie/irishfinancenews

[3] Robert Fogel, January /February 2010. $123,000,000,000,000*
*China’s estimated economy by the year 2040. Be warned. http://www.foreignpolicy.com/articles/2010/01/04/123000000000000

[4] Gordon C Chang, January 8, 2010. China’s Economy To Reach $123 Trillion? A Nobel Prize winner seems to think so. Here’s why he’s wrong.
http://www.forbes.com/2010/01/07/china-economy-robert-fogel-opinions-columnists-gordon-g-chang.html

————————————————————————————————————————————————-

————————————————————————————————————————————————-

————————————————————————————————————————————————-

   [ 'Mwalimu' Julius Kambarage Nyerere ]
It takes extraordinary personal strength for a leader to admit in public that he is a failure.

Julius Nyerere is the only one I know who has ever done it.

Some time towards the end, he stood on a podium to announce that he had failed to achieve the social goal that had driven him into leadership.

But if you have genuinely tried, failure is to be respected.

Julius Nyerere is among the extremely few world leaders who have selflessly attempted great things for their national peoples.

Other African leaders — notably Leopold Senghor and Tom Mboya — have spoken of “African socialism” as a means of restoring human dignity to the African person after a protracted era of colonial brutalization and dehumanization. But none has ever offered a plausible definition of “African socialism.”

Mwalimu Nyerere was the first — probably the only — African nationalist leader to cast a serious moral and intellectual eye upon Africa’s “extended family” tradition and weave a practical national development philosophy around it.

Ujamaa had two basic components.

The Ujamaa Village was an attempt to revive traditional rural communalism — bringing groups of villages together, investing collectively in them and running them through modern democratic precepts.

Since the turn of the 21st century, Kenya’s own leaders have divided and sub-divided what used to be called districts into veritable village units, claiming a purpose similar to “Nyerereism” — to bring utilities and social services “closer to the people.”

The second component was much more theoretically shaky — a series of nationalizations intended to bring urban commerce and industry under state control, the state purporting to be the public’s trustee.

But the 1967 Arusha Declaration in which this doctrine of “socialism and self-reliance” was enunciated opened a Pandora’s box of ideology. Ideas ran from the extreme right to others that were so leftist that, in the circular prism of ideas, they actually bordered on the right!

In a single-party system, all these ideas were forced to contend with one another within that party.

It was no wonder, then, that Marxist-Leninists, Bepari (capitalists) and even Kabaila (feudalists) held central positions both in the party and in government.

This, indeed, was where Nyerere began to reveal his greatness.

In other “socialist” situations — such as Sekou Toure’s Conakry — every thought and activity deemed dangerous would simply have been banned, often on pain of death.

Nyerere encouraged even his bitterest opponents to express themselves freely and without fear.

And he often took them on — not by means of such state machinery as our Nyayo House basement, but intellectually, replying to each critic point by point.

The Nationalist (the party’s own organ) and The Standard Tanzania (the government publication on which Ben Mkapa and I worked — later renamed Daily News) routinely published news, features, columns and letters expressing the most diverse views.

Nyerere demanded only that his detractors produce the facts and figures and weave these into cogent thought.

“Argue, don’t shout!” he once admonished his equivalents of the loudmouthed but empty-headed coalition that rules Kenya.

No, Mwalimu was not a revolutionary in any Marxist sense.

Like all of Africa’s petty bourgeois radicals in power at that time — Ben Bella, Kaunda, Keita, Nasser, Nkrumah, Obote, Ore — he rejected outright all of Marx and Lenin’s theories on class, revolution and party organisation.

His, said he, was a national mass movement in which every Tanzanian must participate.

Such a policy might sound noble, but it was what finally proved Dr Nyerere’s Achilles heel.

You cannot implement any “socialist” program except through a committed vanguard.

For his Ujamaa Village projects, he relied on the peasantry, a property-owning class whose members, as a rule, are interested only in their small individual property.

For his nationalization program, he relied on another property-owning class, what the Kiswahili Academy called vibwanyenye.

This propertied urban class was led by the educated elite who monopolized the civil service, the police, the provincial administration, the army, the classroom, the shrine — a social stratum deeply drilled right from the classroom in liberal Western individualism and self-pursuit.

In 1972, goaded by Idi Amin’s overthrow of Milton Obote — the ally across the Great Lake — Mwalimu issued a set of ruling-party “Guidelines” called Mwongozo, which, among other things, introduced an elaborate leadership code.

But to no avail. Soon the Ujamaa Village administrative network, as well as the two custodians of nationalized property — the National Development Corporation and the State Trading Corporation — were drowning in a well of corruption deeper than Lake Tanganyika.

Mwalimu reacted by decentralizing the leaderships of both those bodies and the central governance system — succeeding only in spreading bureaucratic ineptitude thinner on the ground, thus making corruption much more difficult to detect.

By replacing the colonial educational structure with what he called Elimu yenye Manufaa (“functional education“), he enabled Tanzania to kill up to five birds with one stone.

Tanzanian is the only African country that has totally banished illiteracy, and the Three Rs are solidly linked to vocational interests.

In the process, Tanzania became the African country with the highest degree of national self-consciousness and — through it and through Kiswahili — has almost annihilated the bane of Kenya that we call tribalism.

But, as a rule, internal policy is what guides a country’s foreign policy.

Any nation that tries to cultivate self-sufficiency, self-efficiency, self-respect and self-pride will find it morally compelling to share these ideals with other nations the world over.

Ujamaa inspired Tanzania into spending much of its meagre resources on liberating the rest of Africa and the world from the colonial yoke.

At a time when Nairobi was drowning in crude elite grabbing, Dar es Salaam was a Mecca of the world’s national liberation movements, and a hotbed of global intellectual thought.

From this perspective, it is justifiable to say that Mwalimu Julius Kambarage, son of Chief Nyerere, is the greatest and most successful leader that Africa has ever produced since the European colonial regime collapsed 50 years ago.

   [ Dr. Julius Nyerere's Mausoleum -- Butiama, Tanzania ][ Enlarge Pic ]

References:

1. Mwalimu Nyerere Videos

2. Mwalimu Julius Kambarage Nyerere on The Web

3. Julius Kambarage Nyerere: 10 years after Tanzania poorer for his death, richer for his life

About The Author: Philip Ochieng — is a Kenyan Luo, and an Editor with the Nation Media Group. Like Obama Senior, he too went to the US on the famous Tom Mboya Airlift of 1959 [ when hundreds of Kenyan students were given scholarships to American universities ]. He first met Obama Senior in Tom Mboya’s Nairobi office [ Mboya was then the secretary general of the Kenya Federation of Labour ]. Obama and Ochieng met up again on returning to Nairobi and remained drinking buddies for many years.

————————————————————————————————————————————————-

MediaMatters: Fox News has responded to White House criticisms of its network by claiming that while its “editorial” programs are filled with “vibrant opinion,” its news hours are straight and objective. However, Fox News’ purportedly straight news programs often echo its “editorial” programs and feature smears, falsehoods, doctored and deceptive editing, and GOP talking points. Examples include: [ CLICK HERE ]

White House Questions Fox ‘News’

Olbermann highlights MMFA’s research on “how Fox opinion bleeds into its so-called news“

The Fox Goons At Work:

Hannity concerned about White House “trying to hijack troop decisions away from the Pentagon“

| Who is the Commander-in-Chief MORON!? |

Hannity airs cropped, misleading Dunn quote, then tells Davis “you don’t have a clue what she was saying“

Hannity “viewer warning” declares program “for free-minded, patriotic Americans,” “not White House-approved“

Hannity suggests Obama hasn’t made a decision about Afghan troops levels because he’s busy attacking Fox

Black helicopters return: Beck, others use climate trade negotiations to fearmonger about world government, communism

Toe-Sucking LIAR Morris’ dubious poll numbers: claims Fox viewers are White House “base” in effort to defend his employer

Fox Porno

[ Click Image To View ] [ Also visit: Foxporn.com ] . . . . .

————————————————————————————————————————————————-

————————————————————————————————————————————————-

The Village Idiots who descended upon Washington, D.C., last weekend to protest “socialism,” taxation and government run programs complained that the government run D.C. Metro system wasn’t good enough for them. [ Watch Video ]

Birther Be Gone!

Republicans Embrace Incitement Over Responsibility

————————————————————————————————————————————————-

————————————————————————————————————————————————-

If the Republican Party and it’s congregation comprising of Bible thumping, gun hoarding, tea-bagging bigots and assorted semi-illiterate racists, believe that the country is headed toward Socialism, then instead of marching on the streets with their balls dangling on their confederate hats, they should be the first to show REAL dissent: Give up MEDICARE and SOCIAL SECURITY — both SOCIAL programs that aging Republican bigots are happily enjoying.

Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over, or who meet other special criteria. Medicare operates as a single-payer health care system. The Social Security Act of 1965 was passed by Congress in late-spring of 1965 and signed into law on July 30, 1965, by President Lyndon B. Johnson as amendments to Social Security legislation. At the bill-signing ceremony President Johnson enrolled former President Harry S. Truman as the first Medicare beneficiary and presented him with the first Medicare card.

The most bigoted Republicans are senior citizens — unable to give up their LYNCHING MENTALITY of the past. Give up your monthly Social Security Payments, your Medicare benefits and start lining up at hospital emergency rooms, for us to take your SOCIALIST rants seriously!

President Obama is just trying address the inequities that exist in this country — very modestly! ….Give it Up!!

—————————————————————————————————————————————————-

—————————————————————————————————————————————————-