The End of Growth for
Emerging Countries

Florian Mayer

Since March this year we have been experiencing an unbelievable rally on the stock markets which is unique and never seen before in most Asian countries. While most stock markets in Europe and in the USA gained about 40 per cent, the so called emerging markets gained between 45(Brazil) and 130(Russia) per cent. What is the reason for this difference? The answer is pretty simple: Growth. Economies in Europe and North America are still in trouble. Germany for example expects a decline of their GDP by approximately six per cent this year. Emerging countries however are already on their way back to growth figures of good old times. India for example expects an economic growth of about seven per cent in 2009. How is this possible?
It is not only cheap labor, the set-up of infrastructure, IT services, tourism or the growing domestic demand, it is more. It is what we call "unlimited growth". Unlimited growth means: Everything is possible. Employers mostly do not take any social or environmental responsibility. Profit is what counts. So working conditions are often quite bad and nature has to suffer a lot. At the moment it seems to work perfectly: Profits double after just a few years, so do the stocks. You can make it from rags to riches within a few years, many did.
The question is: For how long can emerging countries go on like that? And what will be the consequences of this behavior? Well, for how long is hard to say. The land has to cope with all kinds of pollution: noise pollution, air pollution, land or soil pollution, water pollution, thermal pollution and radioactive pollution.
Some consequences seem to be quite clear. If you live in a noisy city for your whole life, your ears and your ability to concentrate will suffer. If you inhale polluted air your whole life long, your lungs and breathing organs will suffer and the risk to contract cancer will rise. If you pollute soil, the area to grow crops will shrink in times of a rapidly growing population. The most threatened type of pollution is likely to be water pollution. Why? We all need clean water every day. One of the first sectors which will suffer from ecological devastation will be tourism. Tourists want to relax and get rid of all the stress they face back home. They want to recover in a healthy, clean and green environment. In the first instance tourists are opportunistic. If they do not comfortable anymore, they will go somewhere else for holidays.
Let us draw a picture of one such country twenty years from now: The population counts close to a billion people. The cities covered by black clouds of smog. Tourists have not been coming for years. Large portions of the people who live in the cities suffer of some kind of cancer, a huge per cent of the population sick and ill. The anticipated average life has fallen to 50 years. A liter of clean water costs 3USD. Government programmes to lower the price for water have been failed because of the huge need. Only 15 per cent of the entire population can afford to buy clean water. Wells, rivers and water streams are either dried up or poisoned. The monsoon is history. Because of long periods of drought huge areas have been turned into deserts. Entire swaths of land are used as dumps for any kind of domestic, industrial and radioactive waste. The soil is poisoned. Because of the lack of clean water, healthy soil and the increasing build-on as an outcome of the growing population only very few places can still be used for agriculture purposes. One tomato costs 4USD.
Common man can therefore no longer afford to buy enough food. More than 70 per cent of the population is starving. Government programmes to provide nutrition have been failed because of the lack of food. Due to the inability to work because of diseases and the high expenses for food and health care, domestic demand for any kind of other products has collapsed totally. Thousands of shops gets shut down every day. Unemployment is at an all time high. The best educated people, who have the abilities and the opportunity to emigrate, leave the country.
And then? The Government in its desperation daily prints tons of banknotes and circulates money to everybody. Due to the lack of offers of food the currency faces a hyperinflation. Prices double every day. A tomato soon costs millions. The financial deficit grows rapidly. The Country begs for support. But other countries have same problems. There is no more food and no more water to share.
And then? Due to the circumstances hundred thousands of people die every day. Within ten more years the population shrinks to half of what it was ten years ago. Civil wars break out all over the country. People fight and die for acreage and water sources. Step by step the country bogs in chaos and falls apart.
India is only one of many countries which could face similar problems. And true, that is in deed a pretty pessimistic, black picture, maybe it is the worst case scenario. But it is not that unrealistic when emerging countries go on like they are doing at the moment. There is always a price which you have to pay for extraordinary achievements. Unlimited growth is no exception there. Changes will have to happen if those countries do not want to waste their land and their coming generations.