Question

“The path of economic development is crucial to provide a better standard of living for the people in developing countries. Every nation strives for development. Economic and social progresses are essential components to provide basic needs and thus to secure a reasonable degree of financial security. Others, are less fortunate, have inadequate food and shelter” (Todaro and Smith, 2015, p. 2).

(a) Following the development of neoclassical counter-revolution and new growth theories, many developing countries have utilised various policies to achieve higher levels of growth. To what degree do you think modern economic growth has extended to developing countries? Support your answer with specific country examples.

(b) Many developing countries are still trapped in a phase of low development status. What factors are essential to achieve high economic growth? Discuss the conditions for generating and sustaining economic growth for long term development. Give specific country examples to support your views.

(c) Which policies are most crucial to address the problems of less developed countries?

Answer 1

Introduction:-

It is true, that economic development and growth are extremely important for any economy. Many countries have previously been neglected primarily because of government apathy or because of lack of resources such as land, capital etc. or infrastructural capabilities. Another critical reason has also been the domination by the Western forces on the lands of many countries through direct control which has forced them to grow at a relatively slower rate.

However, after the setup of various international bodies such as the World Bank, the International Monetary Fund and the World Trade Organization, the world has certainly become a better place to live in. Also the fact, that globalization has hit the markets in which selling and buying products is easier and colonization has ended has made countries grow at a faster pace respectively.

Case Specifics:-

Part A)

The concept of modern growth believes in the fact, that growth is a factor of human resource development backed with government institutions which are strong and overall infrastructural growth across various cities.

Over the years, countries have developed across the same model. They have increased their expenditure on education which in turn has benefitted them vastly, Once the human resources become more developed, it is easier for countries to get Investments as the markets across the globe have usually opened up.

The foreign companies come into nations with great potential of investment and are able to harness the potential of the country even further. With government then collecting higher taxes, the country begins progressing through all round development of infrastructure, human resource and healthcare facilities.

Countries such as India were highly underdeveloped when they gained independence from the British. Over the years, a significant amount of investment was done to harness industries and the markets were thrown open to outsiders through the Globalization efforts in early 90's. Since then, investments from across the globe saw a huge rise into the country. This backed with socio economic reforms and investment has rapidly allowed the country to be recognized across the globe for its high quality information and technology industry and is continuing to grow since then.

Part B)

The core concepts of development involve allowing players to have a good market for selling their products, and to enhance the quality of the human resources to such a degree, that employability is inevitable. When companies see that a particular area is politically, socially and economically stable in nature, they do not shy away from making investments which harness production and increase the overall social lifestyle of a particular nation.

The quality of life of countries can only increase if their human resource capabilities are fully harnessed, and if companies are given a level playing field wherein they do not have to worry about political issues and other similar factors which limit their profits.

Sustainable development is thus, only possible when countries increase their human resource capability through active investments in all round education, skill development and also which is backed by infrastructural growth and development and political and social stability.

Countries such as Pakistan & Afghanistan are prime example of countries which still face heavy underdevelopment in all fields primarily because even if they spend money on education, the educated class is most likely to move out of the country due to terrorism, social and political unrest and government apathy towards stability respectively.

Part C)

As indicated in the sections above, in my opinion the following points are most crucial towards address the problems of less developed countries.

(1) Development of Human Resources through investment in healthcare which facilitates their nutritional requirements, and in education which helps them generate sufficient employment is most crucial.

(2) Opening up the economy and not placing heavy trade barriers is equally important as they prevent foreign companies from investing and restricts exports which lead to depletion of foreign reserves and much lesser growth possibilities.

(3) Social, Economic and Political stability are equally important to allow for development. In countries where companies feel risky to invest due to regular social unrest such as Pakistan, the development which takes place will continue to be relatively much lesser.

Please feel free to ask your doubts in the comments section if any.