Essay/Term paper: Obstacle to development

Essay, term paper, research paper:  Business

In this every day changing world, many of us are living in a comfortable home, have enough food to eat, well clothed, healthy, and financially independent. All these are provided to us because we are living in a well-developed country. Others in the third world nation are not so lucky. They may have no shelter, limited food supply, and unemployed. This is because their country is not well developed like ours. Problems that stop these countries from developing are

1. Low levels of living, comprising low incomes, high inequality, poor health and inadequate education.
2. Low levels of productivity.
3 High rates of population growth and Dependency Burdens.
4. High levels of Unemployment and Underemployment.
5. Significant dependence on agricultural production and primary product exports.
6. Dominance, dependence, and vulnerability in international relations.

Low levels of living is one of the major obstacles toward development. Low levels
of living is comprised of low incomes, high inequality, poor health and inadequate
education. The gross national product (GNP) is the most commonly used measure of the
overall level of economic activity. The gross domestic product (GDP) measures the total
value for final use of output produced by an economy, by both residents and nonresidents.
Thus GNP comprises GDP plus the differences between the income residents receive from
abroad for factor services (labor and capital) fewer payments made to nonresidents who
contribute to the domestic economy. Many Third World countries have a low level of per
capital income, in addition there is a slower GNP growth compare to the developed nations.
Secondly, many people in third world countries are unhealthy and constantly battle with
disease while trying to stay alive. The infant mortality rate is very high compared to
the developed countries. One reason that leads to this is that they do not have the access
to safe drinking water and health service. Clean drinking water is one of the major
factors necessary to avoid illness. Water-borne diseases such as typhoid fever, cholera,
and a wide array of serious or fatal diarrheal diseases are responsible for more than 35%
of the deaths of young children Africa, Asia, and Latin America. Most of these diseases
and resulting deaths can be eliminated with safe water supplies. In addition, health
service is very limited in the least developed countries. It is limited in the number
of doctors and beds provided for the patients. Also, all the hospitals and medical
facilities are located in the urban areas. People who are not living in the urban areas
will have trouble getting to hospital and use the medical facilities provide. Thirdly,
many people who live in the third world countries lack education. This is due to the
limited budget the government provides. In most countries, education takes the largest
share of the government budget.
Besides low levels of living, low level of productivity is also a major obstacle
toward development. A production function is often used to describe the way in which
societies go about providing for their material needs. In the developing countries, the
levels of labor productivity are very low compared with those in developed countries. The
reason which lead to this is that they lack capital and experienced management.
Developed countries have enough capital and experience to buy machinery to increase their
productivity. To raise productivity for third world countries, domestic savings and
foreign finance must be used to generate new investment in physical capital goods. This
will give more opportunity to the workers in terms of education and training and have more
high tech machinery to increase in the productivity.
The high rate of population growth is the third obstacle toward development. The
birth rate in the third would country is so high that it is counted as three-fourths of
the population out of the whole world. Children under the age of 15 is close to 40% of
the total population in the third countries as opposed to 21% in the developed countries.
Older people and children are often referred to as an economic dependency burden because
they are the nonproductive members in the society and therefore must be supported
financially by the government or the country's labor force. The dependency burden in
developed countries is one-third of their population, whereas 45% in the less developed
countries. The high dependency burden is stopping the country from developing because
most of the money generated in the country goes to children and older people. If the
country can reduce the population, then the dependency burden will decrease, and the money
that was generated by the country's our force can be used to develop the country.
Another factor that affects the development of a country is the high level of
unemployment and underemployment. Underemployment where a person who is working less that
he/she could or working full-time but the productivity is so low that there is a
reduction in hours. The second one is unemployment, where the person is able to work and
often eager to but there is no suitable job available for him/her. Underemployment and
unemployment are the major impact to low output. People that have no job will not have
any income. Therefore people are not willing to spend money on merchandise such as cloth,
and other. The percentage of unemployment and underemployment is 35% of the labor force
in the least developed countries. If a country has a low export and high import, the
country is losing their currencies to other countries. The way to eliminate unemployment
is to have foreign investment. It can create more jobs for people in the third world.
Another factor that affect development of a country is the substantial dependence on
agricultural production and primary product exports. There is a big difference between
the proportionate size of the agricultural population in the third world countries (75%)
versus the developed countries (5%). People in the third world countries are
concentrating in production of agricultural and other primary production activities
because at low level of income, their first priorities are food, clothing and shelter.
Their agricultural productivity is low not only because of the large number of people
involve in agricultural production but their limited technologies, poor organization, and
limited physical and human capital input. For their primary product exports, they have a
high exports rate. Most developing countries are exporting basic foodstuffs, nonfood cash
crops, and raw materials. Most of their earning is come from export. Although they
earned many foreign exchanges through exports but they used the money to pay the interest
they borrow from other developed countries. In the recent years, their foreign currency
is flowing out more than they received. This is because their export is lower than their
import.
The last factor is Dominance, Dependence, and Vulnerability in International
Relations. Often the rich nations control the pattern of international trade but also
control where technology, foreign aid, and private capital are transferred to developing
countries. Colonial powers left their values, attitudes, and institutions in the
developing countries. Example such as inappropriate education structure, inappropriate
government administrative systems, western style trade unions and curative medicine rather
than preventive medicine. The penetration of rich-country attitudes, values, and standards
also contributed to a problem widely recognized and referred to as the international
brain drain.
The problems of poverty, low productivity, population growth, unemployment, primary
product export dependence, and international vulnerability are the major obstacles for the
development in a third world country. In order to eliminate the problem, modification of
the present international economic order is needed. Many countries have use the same
method and have succeeded in raising incomes, lowering infant mortality, improving
educational access, and increasing life expectancy. If the third world countries continue
to modify their present international economic order, eventually they will be the same,
and people who live in the third world countries will have a better life.

Bibliography
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Todaro, Michael P., Economic Development, 5th editon, Longman, 1994.

McConnell, Brue and Barbiero, Microeconomics and Macroeconomics, McGraw-Hill Ryerson , 1993, or any other introductory economics text.

Gillis, Pwerkins, Roemer, Snodgrass, Economics of Development, W. W. Norton and Co., 1996

Hogendorn, Economic Development, Harper Collins, 1996.