We have seen that people in the third world nations are living under extreme conditions, where the government of these countries cannot ensure the very basic necessities or civil rights of the people. In an earlier article titled “How Bad Is The Poverty Around The World?” we have discussed that many people are living with an income of $2 or less a day and being deprived of basic necessities of life such as food, water, proper clotting, medication, sanitation, education, and so on. In this article we will discuss what we can do to improve the economic conditions of the third world countries, and improve the conditions of millions of people who live in those countries.
Reducing poverty in the third world
To reduce poverty, improve people’s standard of living and raising income, it is necessary to change the economic conditions of the third world nations. Economy of a country will only improve if more jobs are created and people are able to earn a decent income to support their families, and also have a little saved for emergencies. Improving the economic conditions of the third world nations is often challenging because of the weak administration, high levels of corruption, lack of regulations, lack of education, poor infrastructure, and so on.
Millions of people in the third world nations do not own any property. They work on other people’s lands, and live and work for food. Majority of the booming population of the third world nations do not have accesses to modern facilities. The resources are limited, and the government tries to make resources more efficient and usable.
Labor cost being cheaper, the third world nations often attract foreign investors in the labor sector where global companies may setup factories in the third world nations to make their products more cost effective.
Foreign companies help train and educated the labor forces in the developing nations, so that they may become more efficient, and add more value to the labor force, bringing in more money to the country’s economy.
Major characteristics of developing nations
- High birth rate
- Low per capita income
- Low literacy rate
- uneven wealth distribution
- low life expectancy
- High corruption rate
- little technological advancements
- Low capital investments
- Low wage
- developed in the primary sectors of economy
- labor intensive industry
Relation between developing countries and rich countries
Most of the developing countries export raw materials to the rich countries of the world. The economy is based on the primary sectors such as agriculture and manual labor. Developing countries depend on rich countries for finished products and technology. Rich countries often aid the developing countries in form of food supply, education, medical support and other aids whenever needed. It has often been argued that when companies shift their factories in the developing countries, the rich nations may lose jobs and therefore economy may suffer. However, it is very important to achieve economic equilibrium for mutual benefits.
Case study of India and South Korea
If we look at the two major Asian countries among the third world nations, we will see that the development in among the developing countries has been staggeringly diverse since the fifties. These two countries were a lot like each other forty years ago, but have changed rapidly over the period of several decades. Both of these nations were extremely poor, primarily dependent on agriculture. In 1980, India’s per capita annual income was $150 compared to South Korea’s $350. Both the country had low life expectancy rate of about forty years. They were both so far behind technologically that it seemed like they would never catch up with the modern standards of living. India had the advantage of a large population, huge domestic market, farm lands and an infrastructure left by the former British rulers.
Forty years later, South Korea has shown extraordinary success in its economic conditions, its per capita annual income had risen to $2,900, by the end of eighteens, a 6% annual increase over more than three decades. None of the rich countries of Asia showed such transformation. India on the other hand showed an increase of about 1.5% in its per capita income. It rose to $230, by the end of 1980. Between the periods of 1950-1980, India was regarded as an economic failure. However, the recent progress in India has been more rapid, and in the last decade it achieved more development than many other rich countries in the similar time frame.
Many of the poor countries of the world are living in extreme conditions where they are deprived of most common necessities of life and civil rights. Corruption, lack of education, political and economic policies by the government, weak administration, technological advancements, and economic infrastructure is to blame for their economic conditions. Developing countries can be a diverse group with many variables and cannot be considered a homogeneous group. East Asian economic giants have more in common with the industrialized countries than the poorer countries of Asia and Africa.
Most of the countries of the developing nations remained poor because they rejected the orthodox economic policy of free-market economics. The countries in Asia, Africa, and Latin America that failed in economy were also the nations that rejected the orthodox free-market economics most fervently. For one reason or other, they believed that free-market economics will not work for them, but they were wrong.
Source: Institute of Ecolonomics