ASSIGNMENT 6, WEEK 7 1

Sierra Leone vs. Italy: Two Different Ends of the Economic Spectrum

Michael Kennedy

American Military University – BUSN 310

 ASSIGNMENT 6, WEEK 7 2

Sierra Leone vs. Italy: Two Different Ends of the Economic Spectrum

According to One World – Nations Online, the term “Third World” is highly outdated,
but refers to all developing countries that are neither “First World”- so called developed,
capitalist, industrial countries or “Second World” - former communist-socialist, industrial states.
Today, developing countries that are considered “Third World” are classified according to a
variety of different factors - Political Rights and Civil Liberties, the Gross National Income
(GNI) and Poverty of countries, the Human Development of countries, and the Freedom of
Information within a country (One World - Nations Online, 2011). In today’s modern society,
the Republic of Sierra Leone, a country located in Western Africa on the Atlantic Ocean, is one
such developing country that is considered a “Third World” country. Sierra Leone is a country
that has seen over a decade of Civil War between the government and the Revolutionary United
Front (RUF). From 1991 until 2002, tens of thousands of people have been killed and another
two million have been displaced due to the civil war.
Through the support of UN peacekeeping forces and contributions from the international
community, Sierra Leone’s government has slowly begun to regain its authority. Despite this
new beginning, deteriorating political and economic conditions in neighboring countries Guinea
and Liberia have presented problems in continuing Sierra Leone’s stability (One World - Nations
Online, 2011). According to the World Bank database the Purchasing Power Parity (PPP) in
terms of international dollars for Sierra Leone ranks as the 8th lowest Gross National Income
(GNI) per capita in 2009 at $790 per person per year (World Bank, 2010). That is less than 2%
of the GNI per capita of the United States - $45640 per person per year (World Bank, 2010).
However, its GDP growth rate has been steadily increasing at about 5-7% the past few years. The
population of the country has been on the incline, due to the slow return of many refugees from
the civil war, and it currently stands at a little over 6 million people (United Nations Statistics
Division, 2011). As of 2005, 3.8% of the GDP is spent on education, ranking 114th in the world.
Because of this, not surprising is that the literacy rate of the population (age 15 and over who
can read and write English, Mende, Temne, or Arabic ) of Sierra Leone is only at about
35%, with males at 47% and females at 24%. English is the official language but only used by
the literate minority. A child’s school life expectancy is slightly higher than most other Third
World countries at only about 12 years (in comparison, the United States is at 16 years).
However, the life expectancy at birth is drastically lower than many other countries at about 56
years (ranks 198th in the world), mainly due to the very high risk of contracting a major
infectious disease. The infant mortality rate is very high and ranks 14th worst in the world at
about 78 deaths for every 1000 live births (CIA, 2011). Sierra Leone is an extremely poor nation
but is slowing recovering thanks in large part to the substantial aid from abroad. The United
Kingdom and European Union institutions lead in donations to Sierra Leone (as of 2008-2009)
and account for over $163 million USD in aid annually (OECD, 2010).
Sierra Leone from an economic development standpoint in terms of Rostow, seems to
still be in phase 1, the Traditional Society phase, although as its mining industry increases and an
infrastructure to support trade is established, the transition to phase 2, Transitional Stage, may
not be too far off. For the most part, the economy of Sierra Leone is based on very limited
production functions, and therefore, agriculture accounts for 49% of its GDP. Seventy percent of
Sierra Leone’s population falls under the international poverty line (less than $1 a day) and
results in the economy being subsistence driven, a characteristic of the traditional society – about
 ASSIGNMENT 6, WEEK 7 3

two thirds of the population is engaged in subsistence farming. However, natural resources like
diamonds, gold, rutile (titanium ore) and iron ore and agriculture products like cocoa, coffee, and
fish accounted for $216 million in exports for 2006 (CIA, 2011). The Sierra Leone government
and its partners are relying heavily on foreign investors in its diamond mining industry as its
economic base; however, previous corruption and a seriously degraded economic infrastructure
make the industry a high risk to potential investors. Frequent electrical shortages that result in
chronic power outages severely hamper development efforts; however, the creation of a new
hydroelectric dam in 2009 should alleviate those issues (U.S. Dept. of State, 2011). According to
the U.S. State Department, Sierra Leone’s economic policy has shifted from post-conflict
stabilization to poverty-reduction efforts. This includes good governance and fighting corruption;
job creation; and food security (U.S. Dept. of State, 2011).
In comparison to Sierra Leone’s developing economy, Italy’s economy, since World War
II, has transformed from an agriculturally based economy to an industrial state, ranked as the
sixth largest market economy (CIA, 2010). Despite much of its land unsuitable for farming, and
the lack of natural resources, its GNI per capita was $31,360 (PPP in international dollars),
ranking 25th highest in the world (World Bank, 2010). However, through 2000-2008, Italy’s
economic growth only increased at a rate of about 0.8%, although its GDP decreased 1.0% in
2008 due mainly to the global economic crisis. Italy, with over 61 million people, has the 23rd
highest total population in the world. The literacy rate stands at 98%, despite ranking 99th in total
percentage of GDP dedicated to education (4.3% in 2007). Italian is the official language and
school life expectancy, at 16 years, is much higher than Sierra Leone. This statistic is right in line
with other First World countries. The life expectancy at birth is at 82 years, ranking 10th in the
world and 26 years more than Sierra Leone. The infant mortality rate is very low and ranks 214th
in the world at about 3.4 deaths for every 1000 live births (CIA, 2010). Whereas Italy is a large
food importer due to unsuitable land for agriculture, its strength in the world economy comes
from its processing and manufacturing of goods in major industries such as motor vehicles,
pharmaceuticals, chemicals, fashion and clothing, and electric goods. Italy also has a strong
underground economy that accounts for 27% of its total GDP (CIA, 2010).
In comparison of economies, Sierra Leone and Italy are at vastly two ends of the
spectrum. Surprisingly, Sierra Leone has more to offer the world economy naturally through its
abundant natural resources and suitable land for agriculture; however, Italy is a much bigger
player in the world economy due to its economic infrastructure and ability to turn imports into
valuable exports through the manufacturing and processing of certain imported goods. Sierra
Leone, due to civil war, corruption, a weak government, and lack of an economic infrastructure,
continue to exist as a developing Third World country. If it were not for the vast amount of
financial aid given to the country through many of the world’s economic leaders, Sierra Leone
would be much worse. 60% of Sierra Leone’s total budget comes from foreign aid, about $300
million dollars annually (Mackenzie, 2007). With the huge financial contributions given to Sierra
Leone from foreign aid, one can only hope that its economy will grow and flourish to the point
where it can become self sufficient financially.
 ASSIGNMENT 6, WEEK 7 4

References

CIA. (2011, March 16). World factbook sierra leone. Retrieved from
https://www.cia.gov/library/publications/the-world-factbook/geos/sl.html

Mackenzie, J. (2007, January 4). Sierra leone's failing health .

Retrieved from
http://news.bbc.co.uk/2/hi/programmes/newsnight/6231905.stm

OECD, World Bank. (n.d.). Sierra leone. Retrieved from

http://www.oecd.org/dataoecd/63/27/1878706.gif

One World - Nations Online. (2011). First, second and third world .
Retrieved from
http://www.nationsonline.org/oneworld/third_world_countries.htm

United Nations Statistics Division. (2011). Sierra leone. Retrieved

from http://data.un.org/CountryProfile.aspx?crName=SIERRA%20LEONE

U.S.Department of State, Bureau of African Affairs. (2011).

Background note: sierra leone. Retrieved from
http://www.state.gov/r/pa/ei/bgn/5475.htm

U.S.Department of State, Bureau of European and Eurasian Affairs.

(2010). Background note: italy. Retrieved from
http://www.state.gov/r/pa/ei/bgn/4033.htm

World Bank. (2010, December 15). Gross national income per capita
2009. Retrieved from
http://siteresources.worldbank.org/DATASTATISTICS/Resources/GNIPC.p
df