Question

Why have some countries prospered economically while others have not? Your response should integrate at least three or four of the main themes and topics studied in this class. Use specific examples of developed, developing, and least developed countries in your response. [This is an Essay prompt.]

Answer 1

It is a known fact, that economies have different lifestyles and categories of people living in them. Over a period of time, economists have been able to classify countries into 3 categories. These are developed, developing and underdeveloped economies. These are ranked on the basis of various parameters such as growth rate, the total output of goods and services, availability of resources etc.

The reasons for the differences among these countries are explained in detail which is as follows: -

1) Infrastructure: -

Developed countries have created enough infrastructure to support industries and allow for production to take place at a higher rate. In countries such as the United States, infrastructure is the back bone of economic development. The availability of infrastructure makes it easier to do business for companies which shy away from developing or under developed counterparts as they would need increasing expenditure to be able to function in that environment. This is the core reason, why low-income countries remain low income as they lack the required infrastructure for economic expansion.

2) Economic Indicators: -

Indicators such as Health care, Nutrition and literacy levels have a lot of bearing on the development of a nation. Developed countries have the required availability of capital, that they spend on these public items. They are aware that education is the back bone and leads to increase in productivity. Similarly, health care is also given due importance and insurance benefits etc are extended to employees to increase their social welfare.

All of the above-mentioned items, help the economy in behaving in a favourable pattern. We have countries like the United States of America which spend substantial amounts of money on the items described above, and have higher growth rates and output growth because their labour force is fit as well as highly educated.

Developing nations or underdeveloped ones such as India on one hand and countries in Africa on the other, remain low productive because they lack basic facilities and the overall level of activity is extremely poor.

3) Gender Development: -

Developed countries believe in equality of gender, and they have higher labour participation rates of women as well as men. On the contrary, social conditions in countries such as India, where women are frowned on if they work in the private sector is seen as a major hurdle which restricts their growth. Underdeveloped countries have even higher levels of gender inequality which is the core reason for them remaining poor over the years. Their per capita income is low and the demand for goods and services also suffers as most of the money is earned by one member and is spent on necessary goods or services only.

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