The secret to (ridiculously) fast economic growth

Rapidly Expanding Economies (REEs) are nations that have consistently achieved a GDP growth rate of 6% or more per year over the past two decades. Currently, there are 25 such nations worldwide, including Panama and Guyana as the sole representatives from their region. In stark contrast, the overall economic growth of Latin American and Caribbean economies has been sluggish, averaging at a mere 2.4% per year during the same period.

Investment emerges as a crucial catalyst driving the remarkable growth of REEs. In half of these 25 countries, investment rates stood at 30% or more of their GDP over the past 20 years. Panama, for instance, has consistently invested an annual equivalent of 31.2% of its GDP. In comparison, Latin America and the Caribbean have fallen behind with an average investment rate of only 19.4% of GDP.

One intriguing aspect of investment in REEs is the significant role played by the private sector. Although not all 25 nations provide statistics on private investment, in those that do, it comprises an average of 74% of the country’s total investment. Panama stands out with 84% of its investment classified as private.

REEs thrive on three key elements to fuel their growth. Some, like Qatar and Guyana, rely on their oil production, which has been strategically transformed into highways and public utilities. Another small group, including Uzbekistan, Bangladesh, and Uganda, benefit from the demographic dividend resulting from a young population entering the workforce. The remaining countries prioritize investment, particularly investment driven by private companies, to stimulate their growth.