Types Of Economies
High-Income Economies
Nations with a per capita GDP that supports most of its population <8% of population in poverty
Middle-Income Economies
Nations where a minority of the population lives in poverty ~15%
Low-Income Economies (LDCs)
Incredibly poor nations
Causes for Underdevelopment
Colonialism
Other countries exploit the resources of this country and leave the people destitute.
War
War will halt and outright destroy a countries economy and nothing can be produced
Barriers to Economic Development
Lack of Economic Freedom
Individuals cannot pursue self-interest. The country may be under a dictatorship or unjust monarchy
Malnutrition
Individuals will not have the adequate food to survive and fight. A majority of the food is hoarded by the rich
Low Levels of Investment
Poor individuals do not have money to invest into infrastructure or development of technology.
Population Growth
Large families exacerbate poverty to higher degrees as welfare cannot be given with the same ammount
Dependence on Child Labour
Child labour means children never go to school and gain literacy skills. It is difficult to solve child labour because sometimes children are the only breadwinners in their family
Natural Resource Intensive Production
Economy is based off limited and rare supply of natural resources. If the market crashes, then their dependence on the resource means they will suffer aswell.
Debt Burden
Many LDCs have borrowed money from international banks and struggle to pay it back because they do not have strong enough economies to export goods to make back money.
Development Strategies
Political and Economic Stability
Economic stability ensures that the domestic market is able to be self-sufficient. Political stability ensures long-term planning and promotes capital investment.
Population Control
Reducing the number of mouths to feed. Can be done like:
- China’s one child policy
- Investing in public education to encourage having less children
Investing in Productive Resources
This means investing in education, healthcare, nutrition, training, etc. A good market is in developing intermediate technology from low-cost labour to assist in bare-survival necessities.
Freer Trade
Advanced countries tend to outsource manufacturing jobs to LDCs This helps a bit, but also has its own share of problems
Foreign Aid
Relief programs for events such as:
- Droughts
- Famine
- Civil War And structural programs to build infrastructure
Debt Reduction
Debt brings a nation to bankruptcy. If we remove these debts, then the nation will be able to allocate its resources more effectively to growth