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Figure 1. Governments of today’s low-income countries spent more on average in 2018 than today’s advanced economies did in 1900 (in percent of GDP)
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Charts of the week: Economic trends in developing countries

Lessons from developed countries’ pasts, how developing countries are getting left behind in trade agreements, and manufacturing miracles. In this week’s Charts of the Week, we look at economic development in low-income countries.

Developing countries spent more of their GDP in 2018 than now-developed countries spent in 1900

Ivailo Izvorski and Kenan Karakülah’s report shows that, on average, low-income countries spend more than twice as much of their GDP as now-developed countries spent over a century ago. While this spending may be necessary, it demonstrates the need for developing countries to invest more in the business sector and private capital to increase their overall GDP.

Figure 1. Governments of today’s low-income countries spent more on average in 2018 than today’s advanced economies did in 1900 (in percent of GDP)

Lowered global tariffs mean that Vietnam is open for business

A prime-age workforce, a politically stable climate, a good geographic location near major supply chains, and lowered tariffs have all created the necessary environment for Vietnam to become a manufacturing powerhouse. Due to strategic investment and free trade agreements, foreign investors are pouring into Vietnam and increasing the country’s overall GDP according to Sebastian Eckardt, Deepak Mishra, and Viet Tuan Dinh.

Figure 2. Vietnam is open for business

The number of new trade agreements between developed and developing countries has decreased in recent years

Trade agreements are often tied to development promotion, says Sarah Bermeo, which is why it is concerning to see that the number of new trade deals between developed and developing countries has dramatically decreased in recent years. There are vastly more existing deals today than there were 20 years ago, however this slow in agreements in favor of alternatives such as foreign aid to developing countries is something to watch.

Figure 1: Trade agreements between industrialized and developing countries

Julia O’Hanlon contributed to this post.

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