Thursday, May 15, 2008

A tale of two countries

Marian Tupy has an article telling the story of Botswana and Zimbabwe. Both countries started out similar.

Botswana went from $700 to $10,000 of per capita GDP over 40 years. This was done through a strategy of `a limited government and one of the freest economies in Africa. (In its 2007 Economic Freedom of the World report, Canada’s Fraser Institute ranked Botswana’s economic freedom on par with that of Belgium and Portugal).'

Zimbabwe pulled off the first hyperinflation of the 21st century, getting to an exchange rate of 1 USD to 200 million Zimbabwean dollars. They just launched a 500 million dollar bill (I wasn't able to find an image of this - please email me a good scan of one if you have one!).

Let's hope more countries do policies more like Botswana and less like Zimbabwe. On this subject, you might like to see The return of the idiot.

5 comments:

  1. It seems that the site american.com is down and google cache can't return this document you referred to either.

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  2. When we do a round-up of your articles, TV interviews etc. alongwith where the USD-INR rate stands today, we see that the rate is creeping from 39.75 sometime ago to the 42.50 today.

    Is this a transient phenomenon? Does this vindicate Dr YV Reddy and his central bankers?

    Shankar R
    L&T Powai

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  3. Apparently within a week of printing 100 million dollar notes, Zimbabwe had to start on the 150 million dollar notes! What a disaster for the poor Zimbabweans - barter is better...

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  4. image of the 0.5 billion currency note was in BS a cpuple of days back..

    ReplyDelete

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