We live in a world which is prosperous to a few and not too many. Theaverage citizen of the U.S., is nearly 10 & 40 times wealthier whencompared to counterparts in Central America & some African nations.
As described by Daron Acemoglu & James “a nation’s economic problemsare fundamentally caused by a lack of inclusive political rights”. Plainly put, poor countries are poor because those that have power makechoices that create poverty and organize the functioning of society for theirown benefit, with the expense of its citizens. The present model either forsuccess (or) failure of nations depends on the interlinking of political &economic institutions. We mustwork & develop an economy which consist 3 fundamental characteristics: Ø Capital Ø Labor Ø Efficiency Factor Thecapital of a country comprises of infrastructure, machinery, buildings etc.Labor on other hand possess the most effective weapon, the country’s humanresources which can be used in production facilities. The emerging concern isthe “efficiency factor”, which not only determines how the country can turncapital & labor into the desired & efficient output; but, also decidesthe differences in GDP per person around the world.In the ever-changingworld, the wealth of a nation depends on trade, whether it is in goods orservices. The basic requirement of trade is “infrastructure”, and goodinfrastructure depends on investment.
Which brings us to the true essence ofdevelopment. The more a country is well ‘developed’, the more money it can make.So, while in the case of poor countries, we are discussing about “Less EconomicallyDeveloped Countries” (LEDCs), we should focus on the very basic issue i.e., “whysome countries are poor?”, “what we need to work out?”, “why they are notdeveloping?”. And there are important factors like, geographical, political,& cultural coming in to space.
Geographicalfactors Climate – Manycountries face with varied climates, which does not necessarily suit with theworking conditions in that country. Favourable climatic conditions help thecountry to developLocationResourcesStabilityPoliticalfactorsPolitical InstabilityOne of the important reason for a country notable to grow is “bad government”. Governments in present day world shouldencourage development through globalization, automation, infrastructure & projectswhich are useful to the nation. Necessary law and regulations should beput into practice both for the businesses, private individuals and protect the propertyrights, contracts, patents and copyrights. This could be ethnic tension,tribalism, terrorism or out of war.CorruptionCorruption can really hamper the growth of thecountry as MNC’s does not show interests in those nations with high corruptionrates. Excessive bureaucracy is base for rise of corruption. If the process toget permissions and document verification is too long it will create aunhealthy environment in the nation.
Trade lawsThe issue of “trade law”, is largely a politicalmatter. The World Trade Organization which is there to protect rights of weakernations and work for their development, has been implementing different laws& rules for different countries. The export tariff rates for developingcountries are high when they trade with developed nations and not vice-versa.The WTO has been controlled by U.
S., and European nations, and it favors forthe welfare of richer nations first. The subsidy rates are also divided on anunequal manner. Culturaland social factors DiscriminationIt is one of biggest problem the world is facing since manyyears. If some people/groups are discriminated based on color, tribe, caste,racial category, language; that particular country’s overall productivity willhamper. No one can be denied right to work based on their ethnicity orlanguage. The Muslim countries especially face poorer exam results and economicprospects than other nations. Another discrimination would be based on therole of women.
Religious & cultural aspects may hinder the role of women,which amount to leaving entirely the other half of population without economic,political, education rights and thereby cutting their contribution to overalldevelopment.PopulationExcessive population is shivering many countriesin the world as the space to live is being decreased day by day in the world.Governments of those nations with excessive population should make stringentlaws to control the birth rate and give necessary incentives to those whofollow them CultureThe culture can have serious effects onbusiness, trade and development. In present day world manyorganizations/countries have opened up to globalization & conduct businessaccording to the local tastes and customs, if they don’t obey the laws &cultures they face losses and difficulties from the governments. There are fewnations which still hung to the notation of nationalism and closed to outside world(Ex: North Korea) OverseasDevelopment Agencies (ODA)OverseasDevelopment Agencies can be defined asanagency or organization which is funded by a group of countries (or) by thecitizens of different countries which provide aid for international development.
It can be done in terms of supplying goods,services, loan/monetary, military assistance, medical, food and training aid. Generallydeveloped nations help emerging and frontier nations.Somenotable organizations are the World Bank, United Nations Children’s Fund andthe International Monetary Fund. ODA’s can also be owned and controlled byprivate individuals like Bill Gates, who help different nations and causes.Reasonsfor ODA’s Help to Under- Developed / Poor NationsThe reasons why ODA’s give aid can be divided upon 3 factorswhich are social, economic and political.
The detailed explanation is followedbelowSocialfactorsThe ODA’s give aid for poor/underdeveloped nations becauseof humanitarian reasons. They indicate and try to send out a message to theworld that their organization/country want to make this world a more betterplace to live in peace & prosperity. They also try to improve & providethe standard of living, job & education opportunities for the people in thedeveloping/recipient country. EconomicfactorsODA’s give aid to benefiteconomically & also to gain higher interest rates which are repaid as aloan at the time of expiry. The ODA’s can trade products at their own indicatedprices (which are usually less from the market price) from the recipient nationand decrease their manufacturing cost PoliticalfactorsThe ODA’s give aid tonations which might be politically useful as an ally during difficult times andalso these organization’s and their countries, showcase their power to theworld and maintain a grip on these weaker nations and use them to their benefitin difficult times. Giving aid depends on the donor country status & powerit has within the international community.