Question

1. What are some of the growth strategies that have been employed by the developing nations? Describe in detail.

2. How successful are these strategies? Justify your answer.

3. Provide examples of developing countries that have successfully applied some of these growth strategies.

Answer 1

A developing country is one where the per capita income is low relative to that of fully developed countries. In human terms developing countries typically have major population percentage with poor health, low levels of literacy, inadequate dwellings and meager diets.

The key to development rests on four fundamental factors namely human resources, natural resources, capital formation and technology.

A lot of poor countries are forever running hard just to stay in place. Even as a developing nation’s GDP rises, so does its population.

So it becomes a mammoth task for such nations to overcome poverty with birth rates so high. Equitable distribution of wealth cannot happen in an economy unless and until it becomes self-sufficient. One strategy will be to curb the population, even if such actions run against prevailing religious norms.

Strategies for Development:

Economic planners in developing countries lay great emphasis on the following strategies of development with regard to human capital:

Control disease and improve health and nutrition

Improve education, reduce illiteracy and train workers

Above all, do not underestimate the importance of human resources.

Literate people are knowledgeable and resourceful; their analytical skills help them to weigh the pros and cons of specific social situations that affect their standards of living.

Asian countries like India and China with exploding population figures are in a situation to invest their human capital for productive purposes.

Besides attempting to stabilize commodity prices, developing nations have promoted internal industrialization through policies of import substitution and export promotion. Countries emphasizing export promotion have tended to realize higher rates of economic growth than countries emphasizing import-substitution policies.

Few of the growth strategies are the following:

1. Create a manufacturing hub: As developing nations have cheap labour, it should create a favorable environment for manufacturing. Example: China's favorable policy towards for manufacturing

2. Promote FDIs. Countries such as India has relaxed its FDI policy in few sectors to entertain foreign investments. Recent FDI relaxation in retail and telecom is a better example

Other strategies include the following:

3. Improve infrastructural facilities

4. Improve labour productivity

5. Favorable business environment in terms of tax incentives, government support, PESTL factors etc.