State of the Tropics Is life in the Tropics getting better? Economy

Economy

The past 60 years has seen a dramatic rise in living standards across the world. The reasons for this development are varied and complex, however economic growth is considered the most useful indicator for improvements in living standards. Nations with strong economic growth are better able to reduce poverty, strengthen political stability, improve quality of environmental protection and lower their rates of crime and violence.

Over the last 30 years economic growth in the tropics has outperformed the rest of the world by almost 20%. The tropics currently accounts for about 19% of global economic activity, much of it driven by South East Asia and South Asia. Nevertheless, in 2010, GDP per capita in the tropics was only one-third that of the rest of the world. Growth rates in Africa and South America have also improved significantly over the past ten years, influenced by stronger demand for commodities, greater political stability and improved governance.

Trade of goods & services

Trade has been a vital contributor to the development of human societies and culture for millennia. The extent of trade in goods and services provides an indication of a nation’s integration with the global economy. Exports of goods and services as a percentage of GDP have grown rapidly in the tropics over the 30 years to 2010, increasing from 25 to 47%. Over the same period, imports in the region have grown by 210%. During this time South East Asia was the largest trading region and South Asia had the greatest growth.

Foreign direct investment

Foreign direct investment (FDI) is a measure of foreign ownership of productive assets such as factories, mines and land. It is an important driver of economic growth in developing regions. FDI increased in all regions of the tropics with an overall tenfold increase across the region in the 30 years to 2010. Northern Africa & the Middle East reported the highest rate of net foreign direct investment flows in the tropics.

Creating, using and passing on knowledge and innovation is a fundamental driver of human development. Science and technology, however, are not always transferable - what applies in one place may be useless in another. Many issues and challenges unique to the tropics, such as the region's climate, require regionally-specific innovations and technologies.

Research & Development Investment

Investment in research and development drives innovation. R&D investment in the tropics severely lags that of the rest of the world. R&D expenditure as a percentage of GDP in the tropics was 0.6% in 2008 compared with 2% in the rest of the world.

Tertiary enrolments

The proportion of people enrolled in tertiary education is a measure of a nation's investment in higher education and innovation. Across the tropics, enrolments in tertiary education are growing rapidly, although they started from a low base. In 2010, the Caribbean had among the highest rates with 6200 enrolments per 100,000 people, largely due to Cuba's progressive education policies. By comparison, Central & Southern Africa had the lowest rate at 780 per 100,000.

Scientific & technical journal articles

Knowledge transfer is driven by the publication of peer reviewed journal articles and books. These outputs are an order of magnitude lower in the tropics (1.8 articles per 100,000 people in 2009) than the rest of the world (18.9 per 100,000).

TROPICAL UNDERDEVELOPMENT: A THING OF THE PAST?

In this essay, Dennis Trewin, former head of the Australian Bureau of Statistics, uses updated data from the State of the Tropics report to revisit the seminal work of Jeffrey Sachs on underdevelopment in the tropics. Is tropical underdevelopment a thing of the past? Clearly the answer is no. However, unprecedented growth and change in recent years has closed the gap between the tropics and the rest of the world, and within an appropriate policy framework can continue to do so into the future.