Problems of Less Developed Countries - Essay Example

Running Head: Economic Problems faced by Less-Developed Countries Problems faced by Less-Developed Countries [Institute’s Problems faced by Less-Developed Countries No country is self-sufficient. Every country in this world has been divided into two broad terms developing country or developed country. Countries that have a strong industrial sector or base with a high standard of living and great economies are known as developed and countries which does not fits in this definition are known as developing countries or less developed countries. Some of the developed or high-income countries defined by the World Bank include United States, Japan and China. Development of any country depends upon multiple factors such as gross domestic product (GDP) which tells the total market value of finished goods in a period of time, which is used in trade purposes and for the consumption of the city itself. Secondly, life expectancy also plays a great role low life expectancy or high death rate means that the country is facing high infection rate, high air pollution, low medical facilities and citizens are facing high mental illnesses. On the other hand, literacy rate is also one of the factors. If the country is having a low literacy rate that means that there are less skilled labour and it is much more expensive to train illiterate person as compare to literate person. As far as less developed country is concern they do face many problems and they are fighting back in order to overcome those problems. Some of the problems faced by less developed countries are low gross domestic product, less consumption low government spending and low productivity.GDP is one of the key factors to determine the growth of the nation. Secondly, less industries as we look at China when they got independence in 1949 they were having few industries and due to this the government took some useful steps in order to increase the productivity of the nation they spend most of the income generated from other sources at industrial sector in order to increase their GDP. (Brue, 1995) Developing countries are those countries that do not attain the significant degree of industrialization according to its population, and which have therefore low standard of living. There is an inverse relation between low income and high population growth. One of the major problems that less developed countries face is overpopulation, low death rate and high birth rate. In order to control this situation, the government should take immediate steps because as the population increases the per capita income decreases. Economic growth is one of the major factors in determining the performance of the country as a whole. Economic growth stands for the increase in value of goods and services produced by an economy (GDP). Economic growth means that production done in full employment, which is caused by growth in the demand for the product. Economic growth stands for the percentage change in the annual GDP of any nation, this measure has advantages as well as drawbacks. (Bao, 2006) One of the argument raised against this measure by the critics is quality of life is suffering from such type of growth many things such as environment are not traded or measured in this market and therefore they loose their value. One of the major issues currently faced by almost all the nations is global warming which is not considered by many countries. Secondly, growth encourages artificial needs of the people. Industries develop new taste for the consumers and as a return, the wants are then changed into needs and consumer rather then the masters of the economy become the servants of economy. Another thing was that the human population is so large that the total resources needed to fulfil their demand are very less let us take the example of land available, the environment demand 21.9 hectares per person while earth`s capacity is 15.7 hectares per person. Lastly, this also creates the distribution of income uneven the rich becomes richer and the poor becomes poorer. While on the other hand, there are also some arguments in favor of this measure. First of all, the advantage of economic growth is that standard of living will increase it is quite clear that whenever there will be increase in goods and services produced more people will be willing to purchase hence the standard of living will increase. Secondly, more foreign investments, if the country has a good GDP the foreign companies who are willing to expand will invest in such countries because they believe that they can capture the market easily. (Bao, 2006) On the other hand, employment rate will also increase there will be decrease in unemployment. More industries will be launched and this will give a positive outlook of the country as a whole. Diversified goods will also be introduced. The consumers will be able to choose from various numbers of goods. Increase in growth will also help government in various ways this will help government to introduce high tax rates this will increase the extra money to finance various projects of government such as construction of roads etc and will help in overcome its previous deficit as well. One of the most important effects of increase in growth will be the acceleration of investment effect, rise in demand and output encourages the investment in new capital this helps in long run supply of that product. Stock market will also be able to gain benefit from this effect the rise in share price and rise in profit will encourage the investments of the shareholders in large and small firms. Another thing that increase in GDP will bring to the country is the literacy rate; education is one of the factors that are very important for a nation in order to achieve success. We can look at this situation in multi-dimensional way, they high business will increase the number of goods and services produced and this will increase in supply as well, this means that the goods will be much cheaper for the consumers and therefore will be far more competitive. If the currency factor is huge enough, this will also help in generation more revenues from foreign countries. As far as economic growth is concern, there are some advantages, as well as disadvantages of this measure; but it is quite clear that the country should not always consider the profit and revenues. Country should also emphasis on the environment such as the pollution and similar other factors. (Bao, 2006) Conclusively, paper has tried to understand and discuss different aspects of the problems that are faced by less-developed countries around the globe. Moreover, different methodologies were discussed that can be beneficial for economic growth of such countries. It is hoped that the paper will be beneficial for the students, teachers, experts, and nonprofessionals in the better understanding of the topic. References Shuming Bao. (2006). the Chinese Economy after WTO Accession. Ashgate Publishing Limited. Stanley L. Brue. (1995). Macroeconomics: Principles, Problems, and Policies. McGraw-Hill Professional. Wei Ge. (1999). Special Economic Zones and the Economic Transition in China. World Scientific. Read More