Construction World June 2019

COMMENT

In May I attended the launch of Manitou’s new equipment for emerging economies in Thailand. The launch was held in this South East Asian country as it is not only a poster child for growth in the region, but also globally. Even though, for Manitou, South Africa is part of an emerging growth node – Africa – the projected number of sales for this region pales in comparison to those for some markets. What makes some emerging economies perform better than other similar economies? And how is South Africa doing in these stakes? The best 18 Seven of these emerging economies

According to a McKinsey Global report Outperformers: High-growth emerging economies and the companies that propel them released last year, emerging economies have accounted for almost two-thirds of the world’s GDP growth and more than half of new consumption over the past 15 years. The report is the result of the long-term track record of 71 developing economies so that the outperformers among these could be identified. Two common factors were found that aid outstanding performance: a pro-growth policy agenda of productivity and the crucial role that large companies have played in driving growth. One of the reasons why it is so important for economies to grow, is that emerging countries power global growth. They come in various shapes and sizes and their economies vary too. Some of these economies can sustain growth for a long period – the so-called outperformers. Unfortunately South Africa is not one of them – not by a long shot. Our GDP growth rate is barely 2% – and economists predict that this is not going to increase dramatically in the coming years. Of the 71 emerging economies examined, only 18 were outperformers.

benefitted from the competitive domestic market. In fact, these countries have double the number of larger companies than other emerging economies. However, even though companies grow and become large companies, it is not easy to maintain this. Those companies that have stayed at the top share the characteristics that they are able to make investment decision fast and pay higher returns to investors as opposed to companies in developed countries. The report ends with an interesting possibility. If all 71 emerging economies can achieve the growth rate of the 18 outperformers, the global economy can be boosted by 10% … effectively that means another economy the size of China. An entire globe can benefit.

consistently performed well over the last five decades. They are China, Hong Kong, Indonesia, Malaysia, Singapore, South Korea and Thailand. These countries averaged an annual GDP growth of 5,5%. The remaining 11 are more recent outperformers. These countries have managed to maintain an annual GDP growth rate of 5% for the last 20 years. There are Azerbaijan, Belarus, Cambodia, Ethiopia, India, Kazakhstan, Laos, Myanmar, Turmenistan, Vietnam and Uzbekistan. According to the report, the growth in the countries listed above have managed to lift more than a billion people out of extreme poverty – something that was achieved by two factors. Firstly, these outperforming countries all have a pro-growth agenda of productivity, income and demand. This resulted in more being consumed and people being able to save more. As companies and individuals earned more, governments could collect bigger taxes. Because such countries produced more, they were able to export goods and so plug into the global economy. The second reason for the success of these 18 outperformers is that firms

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CONSTRUCTION WORLD JUNE 2019