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TEDGlobal 2013

Dambisa Moyo: Is China the new idol for emerging economies?

June 13, 2013

The developed world holds up the ideals of capitalism, democracy and political rights for all. Those in emerging markets often don't have that luxury. In this powerful talk, economist Dambisa Moyo makes the case that the west can't afford to rest on its laurels and imagine others will blindly follow. Instead, a different model, embodied by China, is increasingly appealing. A call for open-minded political and economic cooperation in the name of transforming the world.

Dambisa Moyo - Global economist
Dambisa Moyo is an international economist who analyzes the macroeconomy and global affairs. Full bio

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Double-click the English subtitles below to play the video.
"Give me liberty or give me death."
00:12
When Patrick Henry, the governor of Virginia,
00:15
said these words in 1775,
00:18
he could never have imagined
00:21
just how much they would come to resonate
00:22
with American generations to come.
00:24
At the time, these words were earmarked
00:28
and targeted against the British,
00:30
but over the last 200 years, they've come to embody
00:33
what many Westerners believe,
00:35
that freedom is the most cherished value,
00:38
and that the best systems of politics and economics
00:42
have freedom embedded in them.
00:44
Who could blame them?
00:47
Over the past hundred years, the combination
00:49
of liberal democracy and private capitalism
00:51
has helped to catapult the United States
00:54
and Western countries
00:57
to new levels of economic development.
00:58
In the United States over the past hundred years,
01:01
incomes have increased 30 times,
01:03
and hundreds of thousands of people
01:06
have been moved out of poverty.
01:07
Meanwhile, American ingenuity and innovation
01:10
has helped to spur industrialization
01:14
and also helped in the creation and the building
01:17
of things like household appliances
01:20
such as refrigerators and televisions,
01:22
motor vehicles and even the mobile phones in your pockets.
01:24
It's no surprise, then, that even at the depths
01:28
of the private capitalism crisis,
01:31
President Obama said,
01:33
"The question before us is not whether the market
01:35
is a force for good or ill.
01:38
Its power to generate wealth and to expand freedom
01:40
is unmatched."
01:43
Thus, there's understandably
01:45
a deep-seated presumption among Westerners
01:47
that the whole world will decide to adopt
01:51
private capitalism as the model of economic growth,
01:53
liberal democracy, and will continue
01:56
to prioritize political rights over economic rights.
01:59
However, to many who live in the emerging markets,
02:03
this is an illusion, and even though
02:06
the Universal Declaration of Human Rights,
02:09
which was signed in 1948,
02:11
was unanimously adopted,
02:13
what it did was to mask a schism
02:15
that has emerged between developed
and developing countries,
02:18
and the ideological beliefs
02:22
between political and economic rights.
02:24
This schism has only grown wider.
02:27
Today, many people who live in the emerging markets,
02:31
where 90 percent of the world's population lives,
02:33
believe that the Western obsession
02:36
with political rights is beside the point,
02:38
and what is actually important
02:41
is delivering on food, shelter,
02:43
education and healthcare.
02:45
"Give me liberty or give me death"
02:47
is all well and good if you can afford it,
02:50
but if you're living on less than one dollar a day,
02:52
you're far too busy trying to survive
02:55
and to provide for your family
02:57
than to spend your time going around
02:59
trying to proclaim and defend democracy.
03:01
Now, I know many people in this room
03:04
and around the world will think,
03:06
"Well actually, this is hard to grasp,"
03:08
because private capitalism and liberal democracy
03:11
are held sacrosanct.
03:14
But I ask you today, what would you do
03:16
if you had to choose?
03:19
What if you had to choose
03:20
between a roof over your head
03:22
and the right to vote?
03:25
Over the last 10 years,
03:26
I've had the privilege to travel to over 60 countries,
03:28
many of them in the emerging markets,
03:32
in Latin America, Asia,
03:34
and my own continent of Africa.
03:36
I've met with presidents, dissidents,
03:39
policymakers, lawyers, teachers,
03:42
doctors and the man on the street,
03:44
and through these conversations,
03:46
it's become clear to me
03:48
that many people in the emerging markets
03:50
believe that there's actually a split occurring
03:52
between what people believe ideologically
03:55
in terms of politics and economics in the West
03:58
and that which people believe in the rest of the world.
04:00
Now, don't get me wrong.
04:03
I'm not saying people in the emerging markets
04:05
don't understand democracy,
04:07
nor am I saying that they wouldn't ideally
04:09
like to pick their presidents or their leaders.
04:11
Of course they would.
04:13
However, I am saying that on balance,
04:15
they worry more about
04:18
where their living standard improvements are going to come from,
04:19
and how it is their governments can deliver for them,
04:22
than whether or not the government
04:25
was elected by democracy.
04:26
The fact of the matter
04:29
is that this has become a very poignant question
04:31
because there is for the first time in a long time
04:34
a real challenge to the Western ideological systems
04:36
of politics and economics,
04:40
and this is a system that is embodied by China.
04:42
And rather than have private capitalism,
they have state capitalism.
04:45
Instead of liberal democracy,
they have de-prioritized the democratic system.
04:49
And they have also decided to prioritize
04:53
economic rights over political rights.
04:56
I put it to you today that it is this system
04:59
that is embodied by China
05:02
that is gathering momentum amongst people
05:04
in the emerging markets as the system to follow,
05:06
because they believe increasingly
05:09
that it is the system
05:11
that will promise the best and fastest improvements
05:13
in living standards in the shortest period of time.
05:16
If you will indulge me, I will spend a few moments
05:20
explaining to you first
05:22
why economically they've come to this belief.
05:24
First of all, it's China's economic performance
05:28
over the past 30 years.
05:31
She's been able to produce record economic growth
05:33
and meaningfully move many people out of poverty,
05:36
specifically putting a meaningful dent in poverty
05:39
by moving over 300 million people
05:43
out of indigence.
05:45
It's not just in economics,
05:49
but it's also in terms of living standards.
05:51
We see that in China, 28 percent of people
05:54
had secondary school access.
05:57
Today, it's closer to 82 percent.
05:58
So in its totality, economic improvement
06:01
has been quite significant.
06:03
Second, China has been able
06:06
to meaningfully improve its income inequality
06:09
without changing the political construct.
06:12
Today, the United States and China
06:15
are the two leading economies in the world.
06:17
They have vastly different political systems
06:20
and different economic systems,
06:22
one with private capitalism,
06:24
another one broadly with state capitalism.
06:26
However, these two countries
06:28
have the identical GINI Coefficient,
06:30
which is a measure of income equality.
06:32
Perhaps what is more disturbing
06:35
is that China's income equality
06:37
has been improving in recent times,
06:39
whereas that of the United States
06:42
has been declining.
06:43
Thirdly, people in the emerging markets
06:46
look at China's amazing and legendary
06:49
infrastructure rollout.
06:51
This is not just about China
06:54
building roads and ports and railways
06:55
in her own country --
06:58
she's been able to build 85,000 kilometers
06:59
of road network in China
07:02
and surpass that of the United States --
07:04
but even if you look to places like Africa,
07:07
China has been able to help tar the distance
07:09
of Cape Town to Cairo,
07:13
which is 9,000 miles,
07:14
or three times the distance of New York to California.
07:16
Now this is something that people can see and point to.
07:20
Perhaps it's no surprise
07:24
that in a 2007 Pew survey, when surveyed,
07:26
Africans in 10 countries said
07:30
they thought that the Chinese were doing
07:31
amazing things to improve their livelihoods
07:33
by wide margins, by as much as 98 percent.
07:35
Finally, China is also providing innovative solutions
07:40
to age-old social problems that the world faces.
07:44
If you travel to Mogadishu, Mexico City or Mumbai,
07:47
you find that dilapidated infrastructure and logistics
07:51
continue to be a stumbling block
07:54
to the delivery of medicine and healthcare
07:56
in the rural areas.
07:58
However, through a network of state-owned enterprises,
08:00
the Chinese have been able to go into these rural areas,
08:03
using their companies
08:06
to help deliver on these healthcare solutions.
08:07
Ladies and gentlemen, it's no surprise
08:11
that around the world, people are pointing
at what China is doing and saying,
08:13
"I like that. I want that.
08:16
I want to be able to do what China's doing.
08:18
That is the system that seems to work."
08:20
I'm here to also tell you
08:23
that there are lots of shifts occurring
08:25
around what China is doing
08:27
in the democratic stance.
08:29
In particular, there is growing doubt
08:31
among people in the emerging markets,
08:33
when people now believe that democracy
08:35
is no longer to be viewed
08:37
as a prerequisite for economic growth.
08:39
In fact, countries like Taiwan, Singapore, Chile,
08:43
not just China, have shown that actually,
08:47
it's economic growth that is a prerequisite
08:50
for democracy.
08:53
In a recent study, the evidence has shown
08:55
that income is the greatest determinant
08:58
of how long a democracy can last.
09:00
The study found that if your per capita income
09:03
is about 1,000 dollars a year,
09:06
your democracy will last about eight and a half years.
09:08
If your per capita income is between
09:11
2,000 and 4,000 dollars per year,
09:13
then you're likely to only get 33 years of democracy.
09:15
And only if your per capita income
09:18
is above 6,000 dollars a year
09:20
will you have democracy come hell or high water.
09:22
What this is telling us
09:26
is that we need to first establish a middle class
09:28
that is able to hold the government accountable.
09:30
But perhaps it's also telling us
09:33
that we should be worried about going
09:36
around the world and shoehorning democracy,
09:37
because ultimately we run the risk
09:40
of ending up with illiberal democracies,
09:42
democracies that in some sense
09:44
could be worse than the authoritarian governments
09:46
that they seek to replace.
09:48
The evidence around illiberal democracies
09:52
is quite depressing.
09:54
Freedom House finds that although 50 percent
09:56
of the world's countries today are democratic,
09:58
70 percent of those countries are illiberal
10:02
in the sense that people don't have free speech
10:04
or freedom of movement.
10:07
But also, we're finding from Freedom House
10:09
in a study that they published last year
10:12
that freedom has been on the decline
10:14
every year for the past seven years.
10:16
What this says
10:19
is that for people like me
10:20
who care about liberal democracy,
10:22
is we've got to find a more sustainable way
10:24
of ensuring that we have a sustainable form
10:27
of democracy in a liberal way,
10:29
and that has its roots in economics.
10:31
But it also says that as China moves
10:34
toward being the largest economy in the world,
10:37
something that is expected to happen
10:40
by experts in 2016,
10:42
that this schism between the political
10:44
and economic ideologies of the West and the rest
10:46
is likely to widen.
10:49
What might that world look like?
10:52
Well, the world could look like
10:55
more state involvement and state capitalism;
10:56
greater protectionisms of nation-states;
11:00
but also, as I just pointed out a moment ago,
11:03
ever-declining political rights
11:05
and individual rights.
11:07
The question that is left for us in general
11:09
is, what then should the West be doing?
11:12
And I suggest that they have two options.
11:15
The West can either compete or cooperate.
11:18
If the West chooses to compete with the Chinese model,
11:22
and in effect go around the world
11:25
and continue to try and push an agenda
11:27
of private capitalism and liberal democracy,
11:30
this is basically going against headwinds,
11:33
but it also would be a natural stance
11:35
for the West to take
11:37
because in many ways it is the antithesis
11:39
of the Chinese model
11:41
of de-prioritizing democracy, and state capitalism.
11:43
Now the fact of the matter is,
11:47
if the West decides to compete,
11:49
it will create a wider schism.
11:51
The other option is for the West to cooperate,
11:54
and by cooperating I mean
11:57
giving the emerging market countries the flexibility
11:59
to figure out in an organic way
12:02
what political and economic system
12:04
works best for them.
12:06
Now I'm sure some of you in the room
12:08
will be thinking, well, this is like ceding to China,
12:10
and this is a way, in other words,
12:12
for the West to take a back seat.
12:15
But I put it to you
12:16
that if the United States and European countries
12:18
want to remain globally influential,
12:20
they may have to consider cooperating
12:23
in the short term in order to compete,
12:25
and by that, they might have to focus
12:27
more aggressively on economic outcomes
12:30
to help create the middle class
12:33
and therefore be able to hold government accountable
12:35
and create the democracies that we really want.
12:37
The fact of the matter is that
12:41
instead of going around the world
12:44
and haranguing countries for engaging with China,
12:46
the West should be encouraging its own businesses
12:49
to trade and invest in these regions.
12:52
Instead of criticizing China for bad behavior,
12:55
the West should be showing how it is
12:59
that their own system of politics and economics
13:01
is the superior one.
13:04
And instead of shoehorning democracy
13:06
around the world,
13:08
perhaps the West should take a leaf
13:10
out of its own history book
13:11
and remember that it takes a lot of patience
13:13
in order to develop the models
13:16
and the systems that you have today.
13:17
Indeed, the Supreme Court Justice Stephen Breyer
13:19
reminds us that it took the United States
13:23
nearly 170 years
13:26
from the time that the Constitution was written
13:28
for there to be equal rights in the United States.
13:31
Some people would argue that today
13:34
there is still no equal rights.
13:35
In fact, there are groups who would argue
13:37
that they still do not have equal rights under the law.
13:39
At its very best,
13:44
the Western model speaks for itself.
13:45
It's the model that put food on the table.
13:48
It's the refrigerators.
13:50
It put a man on the moon.
13:51
But the fact of the matter is,
13:53
although people back in the day
13:55
used to point at the Western countries and say,
13:57
"I want that, I like that,"
13:59
there's now a new person in town
14:01
in the form of a country, China.
14:03
Today, generations are looking at China
14:06
and saying, "China can produce infrastructure,
14:08
China can produce economic growth,
14:10
and we like that."
14:12
Because ultimately, the question before us,
14:14
and the question before
14:17
seven billion people on the planet
14:19
is, how can we create prosperity?
14:20
People who care and will pivot towards the model
14:23
of politics and economics
14:26
in a very rational way,
14:28
to those models that will ensure
14:29
that they can have better living standards
14:32
in the shortest period of time.
14:34
As you leave here today,
14:36
I would like to leave you
14:38
with a very personal message,
14:40
which is what it is that I believe
14:41
we should be doing as individuals,
14:43
and this is really about being open-minded,
14:46
open-minded to the fact that our hopes and dreams
14:49
of creating prosperity for people around the world,
14:52
creating and meaningfully putting a dent in poverty
14:56
for hundreds of millions of people,
14:59
has to be based in being open-minded,
15:00
because these systems have good things
15:03
and they have bad things.
15:05
Just to illustrate,
15:08
I went into my annals of myself.
15:09
That's a picture of me.
15:12
Awww. (Laughter)
15:14
I was born and raised in Zambia in 1969.
15:16
At the time of my birth,
15:20
blacks were not issued birth certificates,
15:22
and that law only changed in 1973.
15:24
This is an affidavit from the Zambian government.
15:27
I bring this to you to tell you that in 40 years,
15:30
I've gone from not being recognized as a human being
15:32
to standing in front of the illustrious TED crowd today
15:35
to talk to you about my views.
15:38
In this vein, we can increase economic growth.
15:41
We can meaningfully put a dent in poverty.
15:44
But also, it's going to require
15:48
that we look at our assumptions,
15:50
assumptions and strictures that we've grown up with
15:52
around democracy, around private capitalism,
15:54
around what creates economic growth
15:56
and reduces poverty and creates freedoms.
15:58
We might have to tear those books up
16:01
and start to look at other options
16:03
and be open-minded to seek the truth.
16:05
Ultimately, it's about transforming the world
16:08
and making it a better place.
16:10
Thank you very much.
16:12
(Applause)
16:14

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Dambisa Moyo - Global economist
Dambisa Moyo is an international economist who analyzes the macroeconomy and global affairs.

Why you should listen

Dambisa Moyo's work examines the interplay between rapidly developing countries, international business, and the global economy -- while highlighting opportunities for investment. She has travelled to more than 60 countries over the past decade, studying the political, economic and financial workings of emerging economies, in particular the BRICs and the frontier economies in Asia, South America, Africa and the Middle East. Her latest book, Winner Take All: China’s Race for Resources and What It Means for the World, looks at how commodities markets influence much more than the global economy -- and examines the possible consequences of China's unprecedented rush for commodities such as oil, minerals, water, and food, including the looming specter of commodity-driven conflict.

She is the author of the brilliantly argued Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa and How the West Was Lost: Fifty Years of Economic Folly and the Stark Choices Ahead. Previously, she was an economist at Goldman Sachs, where she worked for nearly a decade, and was a consultant to the World Bank in Washington.

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