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Ashok K Singh
THE International Monetary Fund (IMF) Managing Director Christine Lagarde was somewhat economical with words when she said in Doha that Qatar was on way to becoming an advanced economy.
But that, perhaps, is not surprising. Finance and monetary policy czars tend to be economical with words. Yet the fact must be stated as it stands- unvarnished truth. And the fact is that Qatar is already an advanced country. On all economic parametres Qatar must be counted among the advanced or developed countries. Lagarde rightly praised Qatar's non-hydrocarbon sector growth achieved through accelerated measures of diversification and boost to private sector.
But here too the IMF chief was a bit economical. So let's analyse why we say she was economical with words on both the counts. For that one must understand the debate surrounding the concept what an advanced economy is? We must also remember that IMF is the only entity that uses the term-advanced economy- for official purposes.
Other international organisations use various other terms such as"developed country","more economically advanced country and"industrialised country" as alternatives.
Some other terms conveying the same meaning are"first world","North" and"post-industrial" countries. However, the criteria used for evaluating the countries by all entities are the same. The most common criteria are: Gross Domestic Product (GDP), Gross National Product (GNP), the per capita income that defines the standard of living of people and the level of industrialisation a country has achieved.
On the average per capita income of the GDP, Qatar is the richest country in the world, richer than the most advanced economies or the most developed countries in the world.
Its per capita income stands in excess of $124,000. Its total GDP is bound to be smaller given Qatar's geographical size. With the highest per capita income, the standard of living of people in Qatar is high and it matches and surpasses that of the best in the world.
One of the most controversial criteria to classify or not to classify an economy as advanced is the level of industrialisation.
Most of the"advanced" or"most developed" countries are those, which have share of their service sector to the GDP bigger than the industrial sector.
Hence the term"post-industrial" economy. Why it's contentious? Take for example India. According to World Bank figures, the share of the service sector to the GDP in India is 57 percent, while the industrial sector contributes 29 percent and the rest is by the agriculture sector.
Yet, India is not a post-industrial economy by a long shot. It's a developing economy because India is a developing country by per capita income and on various parametres such as education, health and social sectors.
This sort of anomalies can be found in several economies. Qatar qualifies as an advanced economy even on the score of using contribution of service sector to GDP as a criterion. In 2017, Qatar's service sector accounted for almost 49.5 percent of GDP compared to 50 percent of industry. Activities in the service sector or tertiary sector include education, health, banking, tourism and hospitality, retail, real estate, media and entertainment, social work, power and water and gas supply.
Technically, one might argue, that Qatar is half percentage point away. Are we kidding? Moreover, the term-industrialised nation is itself problematic as industrialisation is a continuous process.
That's the reason why some economists are in favour of discarding old notions of differentiating countries as developed and developing.
Jeffrey Sachs of Columbia University, for instance, has argued that notion of dividing countries along the developed and developing ones is a 20th Century concept that has no relevance in the 21st Century.
Many experts also feel that using Human Development Index can be a better way of measuring the countries as advanced or otherwise.
Qatar sits among the league of advanced economies when measured by HDI in addition to many more indices such as global peace index, global happiness index, various social and education indices and on numerous security and safety indices.
As for Qatari economy's performance in the realm of non-oil diversification and growth of private sector, Lagarde's praise is well taken.
However, it needed to be spoken in superlative terms. It's true that the global economy currently is in a"sweet spot," as the IMF chief said, having left the days of financial crisis well behind.
However, one must also acknowledge that Qatar has faced headwinds precisely at a time when the global economy has reached a"sweet spot".
Almost nine months' long trade and economic blockade of Qatar by Quartet of Saudi Arabia, the UAE, Bahrain and Egypt seems to have been designed to throttle the Qatari economy from firing on all cylinders when the global economy is racing to clock 3.9 percent growth in 2018-19.
In 2017, the global economy grew by 3.7 percent as opposed to 3.2 percent in 2016. According to the Ministry of Development Planning and Statistics, despite siege and still subdued oil prices, Qatar's economy is expected to record 3.8 percent growth in 2017.
The latest IMF's figure shows the Real GDP growth of Qatar is expected to increase from 2.7 percent in 2017 to 3.1 percent. The reality is Qatar's economy has shown unprecedented resilience to beat the siege. The economy is sound on all macroeconomic indicators. It's sound on all social indicators. It's powering ahead regardless of blockade. Qatar is not just on the way to becoming an advanced economy. It's already one. It's not just doing well; it's doing exceedingly well.
THE International Monetary Fund (IMF) Managing Director Christine Lagarde was somewhat economical with words when she said in Doha that Qatar was on way to becoming an advanced economy.
But that, perhaps, is not surprising. Finance and monetary policy czars tend to be economical with words. Yet the fact must be stated as it stands- unvarnished truth. And the fact is that Qatar is already an advanced country. On all economic parametres Qatar must be counted among the advanced or developed countries. Lagarde rightly praised Qatar's non-hydrocarbon sector growth achieved through accelerated measures of diversification and boost to private sector.
But here too the IMF chief was a bit economical. So let's analyse why we say she was economical with words on both the counts. For that one must understand the debate surrounding the concept what an advanced economy is? We must also remember that IMF is the only entity that uses the term-advanced economy- for official purposes.
Other international organisations use various other terms such as"developed country","more economically advanced country and"industrialised country" as alternatives.
Some other terms conveying the same meaning are"first world","North" and"post-industrial" countries. However, the criteria used for evaluating the countries by all entities are the same. The most common criteria are: Gross Domestic Product (GDP), Gross National Product (GNP), the per capita income that defines the standard of living of people and the level of industrialisation a country has achieved.
On the average per capita income of the GDP, Qatar is the richest country in the world, richer than the most advanced economies or the most developed countries in the world.
Its per capita income stands in excess of $124,000. Its total GDP is bound to be smaller given Qatar's geographical size. With the highest per capita income, the standard of living of people in Qatar is high and it matches and surpasses that of the best in the world.
One of the most controversial criteria to classify or not to classify an economy as advanced is the level of industrialisation.
Most of the"advanced" or"most developed" countries are those, which have share of their service sector to the GDP bigger than the industrial sector.
Hence the term"post-industrial" economy. Why it's contentious? Take for example India. According to World Bank figures, the share of the service sector to the GDP in India is 57 percent, while the industrial sector contributes 29 percent and the rest is by the agriculture sector.
Yet, India is not a post-industrial economy by a long shot. It's a developing economy because India is a developing country by per capita income and on various parametres such as education, health and social sectors.
This sort of anomalies can be found in several economies. Qatar qualifies as an advanced economy even on the score of using contribution of service sector to GDP as a criterion. In 2017, Qatar's service sector accounted for almost 49.5 percent of GDP compared to 50 percent of industry. Activities in the service sector or tertiary sector include education, health, banking, tourism and hospitality, retail, real estate, media and entertainment, social work, power and water and gas supply.
Technically, one might argue, that Qatar is half percentage point away. Are we kidding? Moreover, the term-industrialised nation is itself problematic as industrialisation is a continuous process.
That's the reason why some economists are in favour of discarding old notions of differentiating countries as developed and developing.
Jeffrey Sachs of Columbia University, for instance, has argued that notion of dividing countries along the developed and developing ones is a 20th Century concept that has no relevance in the 21st Century.
Many experts also feel that using Human Development Index can be a better way of measuring the countries as advanced or otherwise.
Qatar sits among the league of advanced economies when measured by HDI in addition to many more indices such as global peace index, global happiness index, various social and education indices and on numerous security and safety indices.
As for Qatari economy's performance in the realm of non-oil diversification and growth of private sector, Lagarde's praise is well taken.
However, it needed to be spoken in superlative terms. It's true that the global economy currently is in a"sweet spot," as the IMF chief said, having left the days of financial crisis well behind.
However, one must also acknowledge that Qatar has faced headwinds precisely at a time when the global economy has reached a"sweet spot".
Almost nine months' long trade and economic blockade of Qatar by Quartet of Saudi Arabia, the UAE, Bahrain and Egypt seems to have been designed to throttle the Qatari economy from firing on all cylinders when the global economy is racing to clock 3.9 percent growth in 2018-19.
In 2017, the global economy grew by 3.7 percent as opposed to 3.2 percent in 2016. According to the Ministry of Development Planning and Statistics, despite siege and still subdued oil prices, Qatar's economy is expected to record 3.8 percent growth in 2017.
The latest IMF's figure shows the Real GDP growth of Qatar is expected to increase from 2.7 percent in 2017 to 3.1 percent. The reality is Qatar's economy has shown unprecedented resilience to beat the siege. The economy is sound on all macroeconomic indicators. It's sound on all social indicators. It's powering ahead regardless of blockade. Qatar is not just on the way to becoming an advanced economy. It's already one. It's not just doing well; it's doing exceedingly well.
