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International Development in Developing Countries

International Development in Developing Countries “…increasing international trade and financial flows since the Second World War have fostered sustained economic growth over the long term in the world’s high-income states. Some with idle incomes have prospered as well, but low-income economies generally have not made significant gains. The growing world economy has not produced balanced, healthy economic growth in the poorer states. Instead, the cycle of underdevelopment more aptly describes their plight. In the context of weak economies, the negative effects of international trade and foreign investments have been devastating. Issues of trade and currency values preoccupy the economic policies of states with low-income economies even more than those with high incomes because the downturns are far more debilitating.1” The topic that I have selected for my chapter evaluation essay is that of “Economic Development”. This paragraph above is the best summary of the chapter’s contents. In this chapter the author discusses the influence of development on the three worlds of countries. These worlds are benchmarks set to assess countries economic states relative to each other. When looking through the topic of development, two drastically different ways to assess it arise. The majority of the western world looks at development in terms of per capita GNP. This means each country is evaluated on a level playing field, comparing the production of each country in economic value. Opposite this style of evaluation is that of the alternative view, which measures a country’s development on its ability to fulfill basic material and non-material needs. Cultural ties are strong in this case as most of the population does not produce for wealth but merely survival and tradition. Throughout the chapter the text exerts more emphasis on the economical evaluation of a countries development rather than the alternative method. It begins to branch off quickly into the classification of countries deriving new topics all relating back to the economical approach. Beginning this discussion is the topic of underdevelopment. Many factors can lead to the underdevelopment of a country. The most common sign of underdevelopment is that of a “Dual Economy” , this takes place when a “small modern elite and middle class make up about 20-30% of a country’s population while the poverty stricken excess make up the rest”2. Secondly low productivity over a period of time can result in a “Poverty Trap”. Incomes are low and increase very slowly compared to developing countries, usually around 7-14% over a time span of about 5 – 10 years1. Insufficient capital poses problems because of low wealth in infrastructure and capital. Lastly the lack of “human capital”, or the personnel to fill various positions in a country that holds importance when promoting development. This can be due to lack of professional services such as schooling and medicine. Without sufficient educational and employment opportunities, the middle class in an under developing country remains very small, leaving the gap between high and low classes too large. After revealing how all countries are categorized through GNP and the evaluation of development. The chapter than moves on to discuss some of the underlying causes that may have started some countries on their way to underdevelopment. Colonial Rulers in the 1800’s initiated some problems than, that developing countries face today. Colonial empires of European states (especially Britain and France, but also Belgium, the Netherlands, and Portugal) covered much of the world, influencing trade in ways beneficial to their wealth and distribution. These colonies “… dismantled political economic threats to economic welfare that is they bought out and shut down, or politically forced countries to discontinue, their production of certain industry that looked promising and may have taken any potential trade away from them. ” The colonial rulers were prominent in emphasizing imperialism. They linked materials with seaports and in turn other colonies with ports would bring in goods and ship them using routes that only led to their sub colonies creating a monopoly like system for that colony and their goods. The chapter goes on to list and describe other factors that have influenced development and underdevelopment in the past and various ways that these factors could change to aids for the future. In the following pages will be my attempt to take the information provided and adjust the presentation to better suit a Canadian university student. Some of the information in the chapter was presented in a rather confusing method, prompting students to lose focus in the valuable content of the material. This problem will be the main focus of my study towards an all around more complete chapter. In this decade the term “Economic Development” can mean a number of different things to many people. In developed countries the term’s definition would likely be different from that of a resident of an underdeveloped country. The idea of development and its relationship to economic ties has become the focus of attention for all countries. Influenced by personnel who use their wealth and power to promote their opinion has led to nations, who are opposed to communism, adapting a covered up communist approach. The discussion of whether this is the proper point of view has many advocates and oppositions. To further explain this issue, the following case will describe the more complex and in-depth underlying problems and traits. In most developing countries, unemployment and poverty go hand in hand, and South Africa is no exception. Some estimates of poverty in South Africa range anywhere from 25 to 50 percent. Compared to other countries in its region Africans are the most likely to be unemployed. It is this racial patterning of poverty and unemployment that distinguishes South Africa from other developing countries. There is a long history of racial segregation and discrimination with respect to political rights, land distribution, employment opportunities and access to basic services. These factors have led South Africa to the state of poverty of which it is today. The relationship between the people and its political leaders has grown sparse and the effects on each person living in poverty are longing. Hanli Venda is a single mother of three living in Peitersburg, South Africa. Her family has lived there for generations. She was born into a family of wheat producers and works with her siblings on their family’s 300 acres wheat farm. The money brought in at the local rural market is that enough to barely feed her family at the best of times. Her children have been a part of the work load since the age of 3. The work is hard but the satisfaction of continuing the tradition of culture ways heavily in her heart. Over the past months, the viewing of others around her leaving their heritage to work for a local industrial developer at a nearby factory, has brought provoking thoughts of doing the same. She, more the rest of the family regards the farm as a cornerstone of the Venda family and must evaluate the effects of pursuing a more developed method of living. Primarily Hanli acknowledges that times have changed for her people and that at times the reserved cultural method of living seems tiresome. She understands that the developing world is a way of life. The affects on her personally is all that she can notice as the majority of resources providing insight on the entire effects of development with industry are scarce in her traveling region. The immediate thoughts of turning her back on her heritage run through her head out in the field. She has been brought up in, and lives in poverty. The area of South Africa where Hanli lives has a dual economy. This occurs when the classes of low and medium/high are separated over a number of years. There are a number of middle and upper class citizens in her country but their numbers are small. Unfortunately they are the ones with the realistic power and voice of the nation towards change and development. The combination of insufficient capital, low productivity, few human services along with a dual economy make up the cycle of underdevelopment. This cycle is more than applicable in Hanli’s area. In the larger surrounding areas the talk of families leaving their roots to adhere to the ways of the industrial developers are increasing. Contrastingly with the added income Hanli and her family could earn by working at one of these operations may be allow them to have access through finance to more human services such as a doctor of teacher for her children. In such underdeveloped countries the doctor per population ratio is as scarce as 6000 to 1. In the case of teachers to population ratio it reaches around 30 to 1. These are important statistics to the average researcher, but to a mother they could mean everything. The dilemma continues as Hanli recounts the stories her father has told her about the Europe invasions as he called it. He spoke of communism with disgust, saying the leaders when he was young intended on making their nation and themselves rich at their cultures expense. Would her father be horrified to hear the news of her leaving? What would the repercussions on her family be? A large number of families like Hanli’s have had to evaluate the situation like hers. Unfortunately while some of these firms from abroad tend to shut down over time leaving poverty stricken families with no employment. Also, more times than not these workers have sold there land over time and when unemployment occurs have nothing to fall back on. In the dilatation designated above, which is the worst possible scenario, the firm is operated to produce a good that usually is indigenous to the land. These citizens, described harshly, completely have been slag of the communist production system. Not all affairs can end in this fashion. Since realizations of the after effects of this situation, a new type of development has been growing. Non-profit organizations have devoting themselves to instilling protectionism to keep foreign companies from exploiting families in poverty. These organizations address the need for a progressive approach that both suits the nation’s economic needs as well as the needs of individual citizens that choose to involve themselves in them. This empowering approach requires new commitment from political and private investment. Appendix 1a) will aid the description of how to break the cycle of underdevelopment. Breaking this cycle will lead to development and a reservation of culture. Insufficient Capital poses a large problem for any underdeveloped nation. There must be some sort out support for those investing so they can feel comfortable that their funds are not going to be lost. The reasons for private investment are usually the bid for returns in the future. In the past countries would totally exasperate all valuables, for instance, all their raw material worth to attract those willing to invest. Nowadays its imperative the there is benefits to each of the parties in the deal that don’t directly relate to cash. For instance any sort of trade where the value of liquid cash is equal to the value of any other goodwill exchanged. It is a fine line to reaching an agreement with so many conditions though it is imperative this occurs. Foreign Aid is a little easier to come by with many non-profit organizations will to lend any help in the way of reasonable funds to aid growth. They also are a solid third party in evaluating the actual intensions of those involved in the outlay of the operations. Many of these involved in foreign aid are very familiar with these attempts to pro develop. Their support will dictate whether or not the task is one that has potential to move forward positively or if the project is one that has failed in the past. The ability to gather funds through private investment is a large and sometimes tough task. This stated, it should be know that it is one of the major keys to succeeding in breaking the cycle of underdevelopment. Trade affects every aim to aid development by directly influencing just how much a state can produce and use to increase their economic stability. Comparative Advantage is a key to positive trade. This occurs when an economy has a comparative advantage in the production of a good or service when it can produce that good or service at a lower cost than its competitors.3 It allows for the state to reinvest funds to aid for additional growth. Secondly, this concept should be expanded to understand that this must occur in a fashion that does not drastically interfere with the attempt to develop by another state in the same situation. Having an operation that adapts to both these concepts is known as Positive Trade. Technical Assistance is the last of the four imperative techniques to break the cycle of underdevelopment. This occurs on both micro and macro scales as important roles of leadership or situation savvy are filled by those with the proper expertise and goals. They should be a proper mix of the in the community, used for instance, in foreman roles. Also in roles such as in leadership and planning must be filled by those capable and are often of other countries or of organizations that participate in these types of scenarios. In conclusion this chapter was filled with an overabundance of information all applicable to the topic. My feeling was that such an overwhelming load of facts and systems directed me away from the most important facts of the chapter. Its imperative that the student understands the small scale relationship to economic development. Therefore my attempt was to highlight the main topics of the chapter and relate them to the reader to provoke intrest and thought towards many of these important life changing situations that occur everyday. If one can see past all the theories primarily and see the cause and effects behind them, they’re appreciation for the ideas stated in the theories. Appendix 1a) is devided from Global Perspectives / Kelleher, Anne / pg. 58 Bibliography: Bibliography 1. Global perspectives/ Kelleher, Ann./ Upper Saddle River, N.J. : Prentice Hall, c1999. 2. The Globalization Of World Politics/Baylis,John & Smith, Steve/Oxford University Press Inc., New York, c2001. 3. Poverty And Development/Allen, Tim & Thomas, Alan/ Oxford University Press, Milton Keynes, U.K., c2000. 4. Globalization And International Relations Theory/Clark, Ian/Oxford University Press Inc., New York, c1999. 5. Civilizing World Politics/Albert,Mathias/Rowman & Littlefield Inc. Lanham, Maryland, c2000.

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