About the Author Ben Vosloo was born in the Empangeni district, Natal, 4 November 1934. After completing his schooling in Vryheid, he went to the University of Pretoria where he majored in political science and economics taking the BA and MA degrees with distinction. After serving as a teaching and research assistant, he obtained a Ph.D. degree in 1965 at Cornell University, Ithaca, New York. On his return to South Africa, Dr Vosloo began his long association with the reform process in the fields of constitutional change, educational reform and economic development. He served as Professor of Political Science and Public Administration at the University of Stellenbosch for 15 years. He was inter alia member of two direction-setting Commissions: the Erika Theron Commission concerning constitutional reform and the De Lange Commission on educational reform. He published widely in academic and professional publications in the fields of management science, political science and development issues. He held offices as a founding member of a number of academic and professional associations such as the S A Political Science Association, the S A Institute for Public Administration and the S A Institute of International Affairs. During his academic career, Prof. Vosloo received several meritorious scholarships and academic awards. Ben Vosloo started his “second” career in 1981 when he was appointed as the founding Managing Director of the newly formed Small Business Development Corporation. He steered the SBDC to its successful track record and its unique position of prominence as a private sector led development institution (1981 to 1995). In recognition of his work, Dr Vosloo was made Marketing Man of the Year (1986), Man of the Year by the Institute of Management Consultants of Southern Africa (1989), given the Emeritus Citation for Business Leaders by the Argus Newspaper Group (1990) and the Personnel Man of the Year by the Institute of Personnel Managers (1990), named as one of the Business Times Top Five Businessmen (1993) and by “Beeld” as one of South Africa’s Top 21 Business Leaders in the past 21 years (1995). He acted as co-author and editor of a trend-setting publication Entrepreneurship and Economic Growth (HSRC Publishers, Pretoria 1994) and was awarded an Honorary Doctorate by the University of Pretoria in December 1995. In 1996 Ben Vosloo started his “third” career. He initially served as a business consultant on strategic policy matters and later became involved in export marketing in the USA, Canada, Europe and Asia. He obtained permanent resident status in Australia in the category “Distinguished Talents” and eventually became an Australian citizen in 2002. He is now retired and resides in North Wollongong, NSW. i Political-Economic Trends Around the World by W B (Ben) Vosloo ------------------------------------------------------------------------------------------------- INDEX Chapter Page Preface v Introduction 1 Nature’s Endowments 1 Human Action 2 The Landes Paradigm 3 Divergent Patterns of Growth and Development 4 The Focus of this Survey 5 References 6 1 The Footprint of the British Empire 7 The British Imperial Legacy 7 Impact of Migration Patterns 9 The Imperial Reach 10 Britain’s Domestic Political Life 19 The British Political Economy in the 20th Century 23 Conclusions 29 References 31 2 The USA – Mankind’s Best Hope 32 Early Building Blocks 32 Political Credo 34 Individualism and Self-Reliance 34 The Enduring American Dream 35 Demographic Patterns 36 Political Party Rivalry 38 Free Enterprise vs Government Intervention 39 Smaller Government vs Big Government 39 Failures of the Bush Era 40 Sources of the Global Financial Crisis of 2008 40 The Obama Era 44 Alarm Bells 45 References 46 3 The Lure of Social-Democratic Market Economies 47 The Emergence of Social-Democratic Economies 47 Basic Characteristics 49 Problem Areas 52 Case Study 1: The Scandinavian Model 55 Case Study 2: Germany – From Warfare to Welfare 62 Case Study 3: The French Dirigiste Model 66 Conclusions 70 References 72 4 Russia – Totalitarian Communism to Bureaucratic Autocracy 73 Profile of the Russian Federation 73 Marxist-Leninist Communism 74 The Collapse of the Romanov Empire 77 The Rise of Stalin 78 The USSR’s Totalitarian Dictatorship 80 The Aftermath of World War II 82 De-Stalinization 84 ii INDEX Chapter Page 4 Russia – Totalitarian Communism to Bureaucratic Autocracy (continued) The Rise of the Soviet Bloc 85 The Transformation of the Soviet Bloc 88 The Collapse of the USSR 91 Challenges of Transition and Transformation 93 Yeltsin’s Uphill Struggle 95 Privatisation 97 The End of the Yeltsin Era 98 Putin’s Russia 100 References 103 5 The Promise of Latin America 104 The Amerindians 104 The Colonial Powers 105 The Slaves 105 Indigenismo 107 Cultural Integration 108 Regionalism 109 Ideological Trends 109 Democrats versus Authoritarian Populists 110 Economic Trends 112 Case Study 1: Brazil 112 Case Study 2: Mexico 119 Case Study 3: Colombia 125 Case Study 4: Cuba 127 Conclusions 129 References 129 6 The Plight of Sub-Saharan Africa 131 Prehistoric Origins 131 Settlement Patterns 131 European Spice Traders 132 The Slave Trade 133 The Colonial Scramble for Africa 133 The Legacy of Colonialism 134 Bad Government 135 Self-serving Bureaucracy, Corruption and Nepotism 136 Misconceived Development Strategies 137 Absence of an Indigenous Modern Sector 138 Official Neglect of Indigenous Entrepreneurship 139 Socio-Cultural Constraints 141 Economic Challenges 142 South Africa’s Exceptionalism 142 Confronting the African Dilemma 151 References 152 7 The Constraints of the Islamic World 154 The Islamic Religion 154 Muhammad and the Koran 154 Pillars of the Faith 155 Trends in Islamic Doctrine 156 Twentieth Century Developments 157 iii INDEX Chapter Page 7 The Constraints of the Islamic World (continued) The Arab World in the Twenty-first Century 159 Non-Arab Muslim States 165 Islamic Statehood 175 Islamic Finance 177 Islamic Politics 178 Islam’s Global Networks 179 Islam and the West 181 Prospects 184 References 185 8 The Indian Enigma 186 Ecological Setting 186 Constitution and Government 186 Population 187 Early History 187 Buddhism 190 Hinduism 191 Islam’s Penetration 192 The British Conquest of India 192 The Legacy of British India 193 Independence and Partitioning 194 India’s Cultural Diversity 195 Indian Politics 196 India’s Economy 199 The Infrastructure Handicap 202 Burdens on Business 203 Democracy’s Drawbacks 204 Intergroup Conflict and Violence 205 The Impact of the World Recession 206 International Perspective 207 Prospects 208 References 208 9 The Momentum of East Asia 209 Japan’s Post-War Recovery Template 209 Industrial Development and Export Promotion 210 Encouraging Savings and Investments 211 Balancing Market Forces and Economic Planning 211 Equal Opportunity, Upward Mobility and Political Stability 212 Education, Training and Technology 213 An Effective Entrepreneurship Culture 213 Effective Business Networking 215 Work Ethic and Non-Disruptive Labour 216 Integration of Tradition and Modern Management Styles 217 Low Dependency Ratios 217 Reconstruction of Singapore under Lee Kuan Yew 218 The Malaysian Experience 219 Japan’s Regression After 1995 222 Impact of the Financial Crisis of 1997-98 223 The New Millennium Fluctuations 224 Conclusions 225 References 226 iv INDEX Chapter Page 10 China the Emerging Giant 228 Historical Background 228 Deng Xiaoping’s Reforms 229 Socialism with Chinese Characteristics 231 The Tiananmen Square Clampdown 232 Deng’s Nanxun Campaign 232 Deng’s Legacy 233 Hong Kong’s Crucial Role 233 The Impetus of Guangdong 234 Cutting the State-Owned Sector 234 Rapid Growth 235 The Tangled Web of Business Relationships 235 Banking 236 Manufacturing Business 236 Trade Patterns 237 Foreign Acquisitions 238 Demographic Patterns 239 Centralised Government 240 Civil Rights 240 Chinese Law 241 Oil, Coal and Pollution 241 Strategic Issues 241 China and the Global Financial Crisis of 2008 243 Conclusions 244 References 244 11 Australia – the Lucky Country 245 Patterns of Migration 245 Agriculture, Forestry and Fisheries 246 Manufacturing 247 Mining 248 Service Industries 249 Economic Performance 249 The “Fair Go” Model 252 Industrial and Labour Relations 253 Regulation of Finance 254 The Role of the Public Service 255 The Rudd Deficit 255 The Aftermath of the 2008/09 Downturn 256 Appraisal 257 References 259 12 Future Political-Economic Challenges 260 Curbing Population Growth and Pollution 260 Curtailing Big Government 265 Downsizing the Public Sector 274 Safeguarding Democracy 278 Rebalancing Global Economic Growth Patterns 284 Managing the Risks of Contagion 287 The Way Forward 291 References 294 v Preface The impetus to write about political-economic trends around the world emerged towards the end of the completion of my earlier manuscript on “Understanding Economic Trends”. It became clear that economic trends are essentially associated with other trends occurring in the world of politics. The main arena of politics in today’s world is the nation-state. Each nation-state, in turn, is characterised by its own peculiar geography and history: the interaction of its natural endowments and its human inputs. Hence it could be argued that the political and economic life of a country is intertwined like the genetic strands of a DNA sequence. These strands interact within the framework of each country’s natural resources (such as climate, soil and minerals) and its human resources (such as institutions, traditions, culture