By Julius Amboko – From LSE Business Review
Perhaps the best thing about Egypt’s emergence as Africa’s second largest economy, overtaking South Africa, is that it had nothing to do with a Gross Domestic Product (GDP) rebasing exercise ─ the periodic revision of GDP estimates, as done by Nigeria and Kenya in 2014, with a view to obtaining an up-to-date reflection of the economy and changing dynamics across sectors. Not to say that there is anything fundamentally wrong with GDP rebasing, except that, too often, the ensuing media brouhaha does more to create an illusion of growth than demystify the underlying recalibration of the economy.
But before we make a toast to Egypt, let us ponder over a critical episode in history. In 1979, the original publication of Prof. Ezra Vogel’s ‘Japan as Number One’ made its debut with the blurb ‘lessons for America’. Anchored on Japan’s rise in global competitiveness, export led growth and adaptability to change, the book (and its title specifically) inadvertently helped fan the view that the economy was poised to overtake that of the US in size in the not too distant future.
The intervening decades have been far less rosy for Japan and thirty five years later, Japan is number three (in GDP size), its dominance on the global stage remains significant but undermined by years of muddling through economic malaise. The rise of China as a pivotal economy in Asia has certainly not helped matters. In 1981 the US GDP was 2.6 times as large as Japan’s, a proportion that would widen to 3.8 by 2014.
Moral of the story? So much for growth and the premium attached to it! In the hype of accelerated momentum, blind-spots on underlying fault lines tend to take root! It is important, therefore, that the rise of Egypt is observed through an objective prism.
Read more at LSE Business Review