To call the likes of China and India ‘developing’ is, frankly, insulting

Given the prosperity and world-leading innovations of so-called emerging economies, from China and India to South Korea and Qatar, the ‘developing’ label is outmoded, outdated and patronising

Richard Harris

Published: 3:30pm, 2 May 2024

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Is this a developing economy: it produces advanced 7-nanometre silicon chips, is the world’s biggest producer of renewable energy components, has more smart factories than anywhere else, is the world’s leading electric vehicle manufacturer, has continental-scale mobile phone coverage and the most powerful hydroelectric, solar and wind power stations, as well as the largest distribution network.

It is a country where people in local and European designer outfits walk on modern streets in major modern cities, eating in attractive restaurants that serve dishes from around the world.

This country could be in Europe or North America except that Pew Research estimates that over half of its 1.4 billion people are “middle class”. Calling China a “developing country” is, frankly, insulting.

And while “less developed” may have described China back in the 1970s when most of its people lived in poverty, it no longer does for a country where extreme poverty has been all but eradicated. To suggest otherwise is a misuse of statistics.

In the investment world, the terms “less developed” and “Third World” have been rightly regarded as pejorative, so descriptions such as “emerging” and “frontier” have come into use. For instance, the MSCI Emerging Markets Index launched in 2001 includes Brazil, China, India, South Korea, Malaysia, Qatar and even three countries in the European Union.

China, which boasts the largest and fastest rail network in the world, has more than 5,300 companies listed on its mainland stock markets. The Bombay Stock Exchange, whose beginnings date back 149 years, also has more than 5,300 companies listed. This is comparable to America, where the New York Stock Exchange and Nasdaq combined have about 6,000 companies listed – and where equity trading goes back more than 230 years.

Meanwhile, “emerging market” South Korea has, for decades, toyed with the top spot of being the most internet-linked country in the world, helped by Samsung and LG – and let’s not forget the global cultural phenomenon that is K-pop.

We are told that Qatar is still emerging even though it is the eighth-richest country in the world by gross domestic product per capita, according to International Monetary Fund data, showing that this metric, as a measure of country development, is fatuous.

The US, recognised as a developed economy, came in at sixth place, while others such as Britain, at 21st, and France (23rd) rank below Qatar.

The only reason that China and India are not in the top 25 is because of their huge populations, each about four times America’s. In absolute nominal GDP terms, China and India rank second and fifth in the world, and will only get bigger because of the multiplier effect of sheer numbers.

The parabolic curve of economic development describes how, as a country develops and becomes rich, its rate of development inevitably flattens out. High economic growth rates cannot go on forever.

Most countries do not handle this post-development phase of atrophy well. The massive investments in leading edge infrastructure that Britain made in the 1870s, the United States made at the turn of the century and Japan made in the 1960s have naturally aged.

It is tempting to delay repair and replacement when money is short, and even when infrastructure is renewed to modern standards of reliability and comfort, it rarely delivers the advancements of the past

07:43

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The Japanese Shinkansen bullet train took its first paying passengers in 1964. Revenue flights on the supersonic Concorde took off in 1976 (just 73 years after the Wright Brothers flew the world’s first successful aeroplane) and continued for 27 years – it has not been replaced. Man last landed on the moon more than half a century ago.

In China, many people still face difficulties in employment, education, medical care, childcare, elderly care and housing difficulties – but those challenges are no different from those in developed countries.

Development is plagued by dated infrastructure, excessive bureaucracy, poorly paid jobs that people hate, family breakdowns, financial problems, sluggish public services, high levels of debt and taxes, substance abuse, creaking health provisions, low productivity and a sense of a loss of tenacity, well-being, happiness and trust. The poor are visible on the streets, or invisible in damp, unhealthy social housing.

If you are going to be struggling financially, you might be happier in a rural rather than an urban environment.

Alternatively, post-development implies fewer raw struggles, a richer life, free time for creativity, and state and community support for the disadvantaged.

China’s urbanisation efforts draw to a close for most provinces and cities

Developed countries have a legacy of wealth and value – a source of pride from developing times, such as the wondrous churches of Italy, the grand buildings of Barcelona and Granada, the social construct of the British or the Swiss, artworks in the Louvre, and the great engineering works of America.

A healthy historical perspective combined with long years of formal education helps with daily problem-solving. China and India fit well into that picture today.

It is time to consign the “developing” label to the dustbin of history. It is outmoded, outdated and patronising for China, India, South Korea and many others. It hinders China in projecting its leadership and strength when seeking to provide aid, influence and support to countries in the Global South; those on the “periphery”. To hold on to the term “developing” simply sends out the wrong message.

Dr Richard Harris is chief executive of Port Shelter and is a veteran investment specialist, writer and broadcaster, and financial expert witness