Developing Economies' Issues - Essay Example

Economic Development The subject of economic development is very vast as it covers all aspects that count in economic growth of a state. No doubt the economy plays a role of back bone in any country’s sustainability & infrastructure. Whenever the system of productivity & consumption of resources is strong in any country, it provides a tool for the economic development. Many poor countries have started from nearly zero to a better, if not best, economical system & have shown a remarkable progress in economical development over a short period of time. Less than half a century ago, many underdeveloped countries like Hong Kong, South Korea and Singapore which were amongst poor nations of the world; have made a rapid growth, flourished & now they are amongst the wealthiest nations of the world. This is all due to some economic reforms their governments have implemented in order to make their country a prosperous one. Any developed nation like US, China, UK, Japan, Germany etc have such policy makers who focus on every possible ways to get strong economically. They focus on every aspect that can add up sustainability in economy; like health, infrastructure, literacy & education, living standards, productivity etc. All these factors combine to form a solid economy & a successful nation (Why economies grow? 2001). No doubt every nation wants that its economy should get stable & strong, but everyone is not like Chinese people who struggled very hard to achieve their goals & made a bench-mark in economical development. India is also one of the developing nations. More than 50% of Indians are poor, but their economy is getting stronger day by day. How is this all happening anyway? The answer is that more than half a population of Indians is suffering & sacrificing for their country. People such as Indians who are mostly related with agricultural sector suffer the most, as this sector receives the least income when the foreign investment is being made in cosmopolitan cities. The infrastructure is being rebuilt, the literacy level is increased in cities & there are more job openings in big cities as compared to the villages. Most labor comes from the backward areas because there are very less opportunities in their own surroundings. Hence the labor force in villages decrease & ultimately this sector fully vanishes. On the other hand, when the economy of any country gets strong enough, then it makes such imports which fulfill the needs of agriculture in country. For example, the geography of US does not permit to have a large agriculture sector, but it imports all such things without burdening the economy or tightening taxes on the public. So every 3rd world country’s citizen should make sacrifices like those made by Indians, in order to make their country economically stable. At this time, India is highly suffering from the Kuznets factors; there is so much economic inequality in the society as the country is developing, but when India would be in the list of fully developed nations, this inequality will decrease when a certain amount of average income will be achieved (Madrick. 2002, Definition of Kuznets curve. 2011). The exchange of goods & the services provided to the people by suppliers make basic infrastructure of a country’s economy. Any country is said to be developed if the demand & supply chain of that country show that there is more supply of goods than demanded by the market. Many factors count in this regard, the natural resources & their extraction according to the geography, manufacturing, distribution, consumption, exchange medium etc. All these factors set the constraints & parameters in which the economy of any country works & may or may not flourish. All activities happening in a country also account for its economic growth. The occupations, education, business & investments are the basic pillars upon which the economy stands. So if any country wants to be flourished economically, it should follow the examples set by the pioneers. All developed countries like US, UK, France, and Germany etc are maintaining the basic motive behind free trade of supply & demand, which is human’s own interest & needs. In those countries the products are offered at an equivalent price which comes up with the total expenditure of manufacture, production, competition in the market, demand of the product & by division of labor (Kendrick. 1961). Based upon the geographical locations, countries differ from each other. Some countries are truly agricultural ones & some are provided with an excess of natural resources. Naturally it can be said that a specific rule to promote economic development does not exist for all the countries. The 3rd world countries have low budgets & revenues & do not have enough money to invest in public or private sectors. Being a consultant to the government; if the country would be an agricultural one, I will advice it to invest in the exports section of the economy. An agricultural country has enough crops, and fruits of this kind to fulfill its own needs as well as to export in the international market. By doing so, the government & the exporters will get enough revenue to boost the economy. If the country would be a one full of natural resources like petroleum, coal, oil & gas etc, then I will advice the government to invite foreign extraction companies on a partnership of 50-50 or 60-40. Once the plants set up in the country, there would be enough resources for the country itself. Previously it had to import all the things related to agriculture but now by investing in this sector, the country not only supports itself but also becomes able to export to other countries, thus making revenue for its own economical growth & development. As economic development of country is a long-term process so to enhance the productivity of a country we have to use Capital Budgeting technique to find out which project is more beneficial and which project gives revenues in how many years. For the best practice you can use Net Present Value and Internal Rate of Return, as these two are highly successful in getting accurate results. Bibliography Definition of Kuznets curve retrieved on 13/12/2011 Madrick, J. G. (2002). Why economies grow: The forces that shape prosperity and how we can get them working again. New York, NY: Basic Books. Why Economies Grow:Economic Freedom Offers Hope to Countries Struggling with Poverty, November 2001 • Volume: 51 • Issue: 11 < http://www.thefreemanonline.org/featured/why-economies-grow> Paul M. Romer. Economic Growth International Monetary Fund: World Economic Outlook Database, April 2011 Kendrick, John W. (1961). Productivity Trends in the United States. Princeton University Press for NBER. p. 111. Read More