Essay/Term paper: Obstacles toward development

Essay, term paper, research paper:  Economics

Obstacles Toward Development

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

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.