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Developing Countries

Section1: Economic Development

Many people are concerned about the economic condition of developing
countries countries whose average per capita GNP is a fraction of that in more
industrialised countries.
Interest in Economic Development
The international communitys concern for the developing countries is
humanitarian as well as economic and political. In many ways developing
economies are similar to other economies of ethe world. The ma!or difference is
that their problems are much greater.
Concern for developing countries. " gap between industrialised and developing
countries has long e#isted but never has it been so obvious or important as it is
today. The growing difference in incomes has led to greater unrest and social
disorder in different parts of the world. Many people in developing countries want
some of the abundance en!oyed in the industrialised countries. $hen these
people do not achieve what they want as %uic&ly as they would li&e the result
can be revolution social upheaval and even war.
Per Capita GNP. In '((' )* countries had per capita GNPs of less than +,--.
The ma!ority of these countries are in "frica and "sia. The .nited /tates has the
largest GNP in the world. The gap between the industrialised and developing
countries is enormous. In the past few years it has become even wider because
many developing countries have e#perienced negative rates of growth.
"nother reason for the growing gap between the industrialised and
developing countries is the small si0e of the output for many countries. Gambias
economic growth of almost si# per cent between '((- and '((' added the
e%uivalent of only +1- to its per capita GNP. In comparison a one per cent
economic growth in the .nited /tates for the same year would have added more
than +1'2 to its per capita GNP.
Obstacles to Economic Development
3efore e#amining some of the possible solutions to the plight of developing
countries we need to ta&e a closer loo& at some common problems.
Population. 4ne ma!or obstacle to economic development is population growth.
The populations of most developing countries grow at a rate much faster than
those of industrialised countries. 4ne reason for this growth is the high crude
birth rate the number of live births per '--- people. The countries with the
highest birth rates ion the world are developing countries while the lowest birth
rates are found in the industrialised countries.
In some developing countries the population is so large that there is
barely enough fertile land and other resources to support. Many less developed
countries depend e#tensively on agriculture adding to the problem. In these
countries an incentive to have many children e#ists. Most farms are wor&ed by
families and children can wor& in the fields at an early age. More children means
more wor&ers. In addition having many children ensures the parents that
someone will loo& after them in their old age.
"nother problem for developing countries is increasing life e#pectancy
the average remaining lifetime for persons who reach a certain age. 3etter
education international aid and emphasis on health5care facilities help people
live longer. " high life e#pectancy coupled with a high crude birth rate ma&es it
difficult to increase per capita GNP.
6inally people have different views on what is the proper rate of
population growth /ome feel that the earth is too crowded already and that
societies should wor& for zero population growth 78PG9 the condition in which
the average number of births and deaths balance so that population stops
growing. 4thers feel that population growth is a natural event and that efforts to
disrupt it are morally and religiously wrong.
Natural resources. "nother obstacle to economic growth is limited natural
resources. No country can develop beyond its resource potential. .nproductive
land or a harsh climate can limit economic growth. " shortage or lac& of natural
resources or energy sources needed for industry also hinders growth. /ome
countries may be fortunate enough to discover a valuable mineral to fianc:
development but most focus on agriculture.
International agencies such as the $orld 3an& fund agricultural pro!ects.
;ecently the $orld 3an& has underta&en pro!ects to control the desert locust <an
insect that destroys crops= in >ast "frica. It has also funded pro!ects to develop
cotton clove cashew tobacco and tea crops in Tan0ania and Ghana as well as
to increase the production of millet and sorghum in northern Nigeria.
Education and Technology. /till another obstacle to economic development is a
lac& of appropriate education and technology. Many developing countries do not
have a highly literate population or the high level of technical s&ills needed to
build an industrial society. In addition most do not have money to train engineers
and scientists.
Many developing countries cannot even afford to provide free public
education for school5age children. In those than can not everyone is able to ta&e
advantage of it. In many cases children must wor& to help feed their families. "s
a result much of the population may not have the basic s&ills needed to continue
with higher education when it is offered.
Foreign Debt. " ma!or problem facing nations today is the si0e of their e#ternal
debt money borrowed from foreign ban&s and governments. /ome nations
have borrowed so much that they may never be able to repay loans.
Capital Flight. "nother problem for developing nations is capital flight the legal
or illegal e#port of a nations currency and foreign e#change. ?apital flight may
cause countries to face a cash shortage which prevents them from paying
interest on their foreign debt. "t a minimum it limits the funds available for capital
Government. Government also can be an obstacle to economic development. "
country whose government often changes will have a hard time developing
economically. /uch constant changes impede long5term planning. >conomic
development is made even more difficult if the political changes occur through
violent revolution where industrial facilities may be destroyed.
>conomic development also will be slowed if a government is not honest.
?orrupt officials can damage the economy in several ways. 4ne way is by
depositing the nations savings in a personal account in a foreign ban&. "nother
way is by spending huge sums meant for the economy on a lavish personal
/ource@ ?layton G.>. 7'((,9 Economics: Principles and Practice Glencoe@ McGraw5Aill pp)(B5