Economic growth should give the people what they want, like longer, healthier lives, more leisure, better public facilities and cleaner air, according to a top financial journalist.

The editor of the Financial Times for Africa, David Pilling, was replying to questions by the Times of Malta ahead of his visit to Malta to address the EY Malta Attractiveness Event at the InterContinental Hotel, Paceville, on Wednesday.

David Pilling

In his book Growth Delusion, he argues that gross domestic product is not enough to distinguish between wealth and well-being. He is asked for his advice given that the island is experiencing remarkable growth to ensure this is sustainable.

Fast growth can be the basis for real success but he thinks Malta should look at some metrics.

How is wealth being distributed? What is happening to median household income? What is the Maltese economy doing for the typical person rather than what is the typical person doing for the Maltese economy? Is income being generated by sustainable industries?

Mr Pilling mentions, as an example, that Britain was growing fast at the start of the century on the basis of a deregulated financial sector that ended up imploding. A lot of that “growth” turned out to be phantasmagoria, he recalls, noting that British people who had to bail out the banks are paying for it now in the form of reduced services and higher taxes.

“Is the growth of the economy bringing things that Maltese people want? This might include longer, healthier lives. More leisure. Better public facilities. Cleaner air.

“Is there any attempt to measure the balance sheet of Malta’s wealth as opposed to its flow of income? You would never buy shares in a company based on last year’s profits but would also want to look at its assets [workforce, equipment, debts].

“But we judge economies by the flow of GDP, paying scant [or no] attention to their balance sheets. A balance sheet includes natural, physical and human capital as well as net financial assets. If growth is to be sustainable and, thus, enjoyed by future generations, this balance sheet should be getting healthier with time,” Mr Pilling says.

The migration problem is, of course, raised too, even because of his experience of Africa.

He points out that migration is a fact of human existence. For various reasons, partly related to the 2008 financial crisis and the subsequent rise of nationalism, flows of people became much more controversial, he says, adding that people will always move, driven by hardship, war or political repression, and attracted by opportunity, and, in some cases, even curiosity. Television, Netflix and social media made the disparities of opportunity clearer for all to see, he remarked. Mr Pilling notes that Europe’s population is stagnant and ageing while Africa’s will double to two billion by 2050 and, then, double again to four billion by 2100. The median age is 19.

“If the world were run according to economic models, you would expect younger people to move from Africa to Europe to ‘boost’ European demographics. Of course, the world is not run according to such models, but don’t expect immigration to fade away,” he says.

He raises two points on aid. Aid is out of fashion and often for good reason.

Ghana President Nana Akufo-Addo, he recalls, spoke of his country and Africa “Beyond Aid”. Aid can have unintended consequences, warp policymaking, kill local industries and fuel corruption and dependence, Mr Pilling warns.

Is there any attempt to measure the balance sheet of Malta’s wealth as opposed to its flow of income?

“Africa rightly aspires to stand on its own feet and chart its own course.”

He acknowledges that aid in emergency situations or desperate food shortages caused by drought or war can save millions of lives.

Also, aid can and has had hugely beneficial effects, like in reducing infant mortality and extending life.

Mr Pilling defines these as the foundations of functioning societies that can rise to President Akufo-Addo’s ambition.

But Mr Pilling points out that the assumption that aid will stop migration flows is probably flawed: “The idea is that only utterly desperate people risk all by crossing the Mediterranean in leaky boats. However, the truly desperate probably do not have the wherewithal to make the journey. It is those who are slightly better off who take that gamble. So, I don’t think there is any simple equation between improving economic opportunity marginally in poor countries and stemming migration flows.”

It would be a different matter were African countries to, one day, become as wealthy as those in Europe, he is quick to add. He argues that the motivation behind geopolitical investment flows does not matter.

To him, investment flows are amoral, adding he was more concerned with things like loss of national sovereignty and the regulatory race to the bottom in an effort to attract investor dollars.

“Money is global but politics is local. This is a problem,” he comments.

Did the World Bank succeed in its ‘carrot and stick’ approach to reduce corruption, he is asked.

“Yes, thankfully now corruption is a thing of the past,” Mr Pilling replies without hesitation but then he adds: “I hope you detected a hint of irony there. Corruption has deep roots and is caused by weak institutions, parasitic power relations and inadequate resources. Corruption cannot be lectured or incentivised away. Only if countries build institutions that ensure access to power does not equate to access to wealth will the problem begin to diminish.”

As Mr Pilling worked in both Asia and Africa he is in a good position to speak about differences in the growth rates and Millennium Development Goals of the two regions. In his opinion, the reason lies in the fact that Asian countries have had a far longer history of being nation states.

China, Korea, Japan, he remarks, can draw on thousands of years of history, adding that Park Chung-hee was a dictator and, even recently, there has been corruption at the highest levels of the South Korean state, which, however, had a national project.

“African countries are too recently constructed and too divided on ethnic and linguistic lines to have such national missions.

“Nigeria was created by the British as a single nation, in spite of the fact that there are 250 distinct languages in the country and that the north and the south are divided along religious lines. When people attain power in Nigeria they generally seek to further their own ends and those of their family, group and region. The lack of a national project is clear in the country’s abysmal record on health and education.

“Some African countries do have a national project. Ethiopia and Rwanda stick out. Both, for the moment, atleast, are doing better as a result,” Mr Pilling says.