Random Analytics: A Story of two Economies: China vs. DRC

by Shane Granger

If you want to look at two economies who sit as far away from each other in terms of economic prosperity in the year 2012, then you need go no further than a comparison between the China and the Democratic Republic of Congo (DRC).

But it wasn’t always so…

Figure 1: GDP per Capita (PPP $) of China and the Democratic Republic of the Congo. Data sourced from the World Bank.

Just 30-odd years before,  Zaire (as the Democratic Republic of the Congo was then known) with its 35.6 million population actually boasted a GDP of $14.39Bn USD and a GDP per capita of $533. China on the other hand with its 1.139Bn citizens had a GDP of $189.4Bn which equalled a mere $193 per citizen.

Backed by the fastest industrial revolution in history by 2011 Chinese GDP would increase to $7.3Tn (the second largest for any country after the US) and per Capita income would explode from $193 to $5,430. For its 1.344Tn citizens, roughly a fifth of the world’s population that would be a 27-fold increase in GDP per Capita and an 84% decrease in those living on less than $1.25 per day. Living on less than $1.25 per day is a standard measurement of absolute poverty adopted by the United Nations as part of its Millennium Development Goals.

As for Zaire…

From being the second most industrialised African nation in 1960 and having rich agricultural and natural resource advantages Zaire would suffer throughout the 1980’s an exponential growth in corruption, known locally as le mal Zarois, or the Zairian sickness. According to Young, C. & Turner, T. (1985) by 1984 Mobuto Sese Seko had amassed $4Bn USD in personal wealth stolen from the state (effectively odious debt). Those billions of dollars stolen by the regime were not reinvested in the country’s infrastructure which had degraded significantly prior to the First and Second Congo Wars. These wars, aka Africa’s First World War, have cost the country and region more than 5-million lives since the commencement of bloodshed in 1996 along with enormous capital and infrastructure loss.

From an economic standpoint this has left DRC and it’s almost doubled population of 67.7 million a GDP in 2011 of just $15.64Bn. The additional $1.25Bn USD growth over the previous 32-years represents an 8.65% increase or just 0.27% per annum. From a GDP per Capita perspective the $231 for each citizen is only 43% of the 1980 figure.

For the DRC it is now a story of what could have been…