How can Third world countries develop? Their lag is entirely because of the 
kind of leaders they have?

Dear Bhamwhiz,

Thank you for your inquiry!

It is very hard for Third world countries to develop.  Their lag is
not entirely, or even significantly because of the kind of leaders
they have.  Don’t misunderstand, their leadership plays a part,
however, it’s not nearly as powerful as the simple fact that we live
in an unequal world.  So poverty, or the Third world, is essentially a
result of global inequality – we don’t live in a socially or
politically fair or just world.

Some experts say that Third world countries can develop by birth
control, technology and health advances, education, financial
monitoring, and a slew of other opinions that have had arguable
success.

I, and many others, would argue however that because inequality
exists, both at the national and international level that makes people
poor, it is nearly impossible for those countries to “develop”.  At
the international level, inequality manifests itself in a trading and
financial system that allows a minority in the developed world to
enjoy an affluent - and ecologically unsustainable - lifestyle at the
Third World's expense.

Example:  Imagine you were born into a huge amount of debt and had
little or no education, and the best job you could find was to sell
cocoa beans, but you live an area of the world where everyone else
sells cocoa beans too, in a world driven by global economic contention
and greed.  So not only do you have a small chance of economic
development because of fierce competition and almost no skills, but
you struggle almost indefinitely to financially advance because it’s
so hard to even pay off the interest on your debt, let alone the debt
itself.  (Note: you have loans from developed countries who are making
more money off of you from interest, increasing the disparity between
rich and poor.)

All over the world, disparities between rich and poor, even in the
wealthiest of nations is rising sharply. Fewer people are becoming
increasingly "successful" and wealthy while disproportionately larger
populations are also becoming even poorer.

There are many issues involved when looking at global poverty and
inequality. It is not simply enough (or correct) to say that the poor
are poor due to their own (or their government's) bad governance and
management. If fact, you could quite easily conclude that the poor are
poor because the rich are rich and have the power to enforce unequal
trade agreements that favor their interests more than the poorer
nations.

According to leading global issues researchers, one major cause of
poverty is structural adjustment.  The IMF (International Monetary
Fund) and World Bank-prescribed structural adjustment policies mean
that nations that are lent money are done so on condition that they
cut social expenditure (which is vital for economic growth and
development) in order to repay the loans. Many are tied to opening
their economies and being primarily commodity exporters, which, for
poorer nations lead to a spiraling race to the bottom as each nation
must compete against others to provide lower standards, reduced wages
and cheaper resources to corporations and richer nations. This further
increases poverty and dependency for most poor nations.  As a result,
it maintains the historic unequal rules of trade.

It seems that total debt continues to rise, despite ever-increasing
payments, while aid is falling. The developing world now spends
something like $13 on debt repayment for every $1 it receives in
grants.  If the Third world can advance, it will have the cost of
international economic equality.  So who is willing to pay that
expense?  What it comes down to is that the Third world cannot develop
until the First world takes major steps towards economic global
equality, which will probably never happen before the return of Christ
himself.

This and additional information can be found at:

Oxfam – Community Aid Abroad – Causes of poverty
http://www.caa.org.au/publications/iid/WATW/WATW2.html

Why a Third World?
http://www.caa.org.au/publications/iid/WATW/

Development Gateway
http://www.developmentgateway.org/

Global Issues
http://www.globalissues.org/

World Bank – Poverty
http://www.worldbank.org/poverty/

Google Groups – Poverty
http://directory.google.com/Top/Society/Issues/Poverty/?tc=1

Search terms used:
Third world development
Developing nations
Poverty
Economic development
Underdeveloped nations
The Third world

Thank you again and enjoy your day!

Best regards,
Skis4JC

---

Request for Answer Clarification by bhamwhiz-ga on 28 Apr 2002 10:49 PDT

I don't think I am convinced by your answer. Your theory is like
under-developed countries can not develop whatever they do. You are
almost saying that under-developed countries are extremely at the
mercy of developed countries!!! You are saying, these countries can
not develop unless developed countries show leniency towards them.

I am strong reservations against these arguments. If you look into
history poor countries transformed into rich countries. eg: South
Korea. South Korea developed into a rich country in the past 50 years.

You are saying these countries are caught in debt-trap and they are
paying too much interest on them. You are saying the developed
countries are taking advantage of this situation and doing *business*
with them. I don't agree with you. If you consider India and China,
the interests they are paying on the debts is only a small percentage
of their GDP. Whereas, they are *wasting* more money on defense. These
two countries are not having so overwhelming debts. These countries
are having large percentage of their population below poverty line. I
also think China made good economic progress after taking up
aggressive birth control, contradicting your theory.

Offering loans on the condition of opening their markets to developed
countries is a good move in my opinion. This creates a win-win
situation. This creates new market for the always hungry developed
nations. Also this can create jobs and revenue in terms of tax to the
poor countries. Before that the population of these countries don't
have much to do irrespective of their skills. By opening their
markets, these countries can get exposure to the work culture of rich
countries. I think good governance combined with tight fiscal
management  and other smart measures can turn the fortune of these
countries. For example, South American countries are developing
because of their proximity to the rich nations. India and China
started progressing after they opened their markets to the rich
nations. Money started pouring into these countries for the last two
decades.

I agree with your argument that inequality is raising between rich and
poor even in the developed countries. This also depends on the
governments they have. Rightist governments offer all kinds of favors
to the rich people thinking that they will invest that money and
create jobs to the poor. Leftist governments give this money to the
poor thinking that they will spend this money for food and education.
This prevents the crime rate and make the poor productive. This is
kind of government is beneficial to both rich and poor. Because the
poor people have to spend that money some how. They spend that money
by buying food from the stores owned by the rich.

I am not satisfied with your answer.

---

Clarification of Answer by skis4jc-ga on 30 Apr 2002 21:02 PDT

Dear BhamWhiz,

I’m sorry that you are not convinced with my answer.  Please let me
try and explain further, I apologize for the inconvenience.

I am not saying that underdeveloped countries cannot develop – surely
they can, and you cited some good examples (re: South Korea).  What
I’m saying is that they can only develop to a point, and most likely
only some of the 3rd world will even ever develop; the global
economics may shift, but the 1st and 3rd worlds will still exist.  The
3rd world may make advancements and look different, but while they are
advancing, so is the 1st world.  Because countries like the U.S. have
so much money and international power, if the U.S. chose to stop trade
with, or aid to, a developing country, *almost* all hope of the
developing nation would cease; therefore under-developed countries are
at the mercy of the 1st world.  Aren’t the weak always at the mercy of
the strong?  How could a 3rd world country substantially develop with
no leniency from the 1st world?

Offering loans on the condition of opening developing countries
markets to dominating countries is *sometimes* a good idea.  But when
there are “winners” there are always “losers” as well, so I’m not sure
I would say it’s a “win-win” situation.  Even developed nations can
only meet the supply and demand curves and that’s what determines the
market.  Often there is not enough demand to meet the generally large
3rd world populous.  Often, by opening their markets to the 1st world
they end up getting exploited (example: sweat shops).  The fact
remains that since before time, before there were 1st worlds and 3rd
world, there were slaves and free, land owners and workers,
bourgeoisie and upper class, peasant and nobility, etc., etc.,.
 
I COMPLETELY agree with you in respect to your comment on the
necessity of good governance and tight fiscal management.  However,
our idea of “tight fiscal management” v. that of a “1st world” South
American country like Argentina is obviously different.  It sounds
like you favor a free market economy, but free market economies
generally only work in theory because of outside policy makers
continuously interfering.  I don’t think free market open economies
are going to solve all the third world’s problems; it’ll actually
often bring more problems.

It all boils down to what you believe about human nature – one can
believe that human nature is intrinsically good, or intrinsically bad.
 But basic rules of logic tell us that there can’t be two true things
in contradiction with each other, so it’s either one or the other.  I
think we’re inherently bad therefore there will always be inequality,
manifested in one form or another, such as today we call it 1st world
and 3rd world

Maybe you’ll find these sites useful for more information and or more
convincing one way or the other:

Third World Network
http://www.twnside.org.sg/

International Monetary Fund
http://www.imf.org

I hope this explanation has helped.  If you are still not satisfied
with my answer please clarifying your question again and I’ll see if I
can help.

Thank you!

Best,
Skis4JC

---

Request for Answer Clarification by bhamwhiz-ga on 01 May 2002 23:34 PDT

Thanks for your response. Yes, as you noticed I am a strong proponent
of free market economies and I do think opening their markets can
bring prosperity to the under developed countries. Yes, I also agree
that the big companies exploit the free labor in those countries to
their advantage. But, there is more good than bad. The big companies
also expect those countries to follow some strict labor rules. If they
try to exploit the labor in wrong means they can get into trouble in
their own country.

In my opinion Mexico, India and China are developing after undertaking
the free market economy approach. They are developing just because of
proximity and their sheer populations. The developed countries can not
miss these markets as they can sell their products for a new huge
market and also they can get cheap labor for their products. Whereas,
the sub-saharan countries can not develop easily as they lack these
sheer numbers. No one gives a damn about these markets. My point is
third world countries are not at the mercy of developed countries. The
developed can not stop the trade with other country to hurt them.
These actions can equally hurt them. Do you think, if US stops trade
with Mexico and China only they will get affected? Do you think the
big companies will allow their governments to take such actions? They
can not always make biased trade laws and threaten them. They can not
easily get away with these kinds of actions.

You made a good point saying this world is *inherently bad*. At least
we both of us not bad :) You are occupied with the prejudice of the
developed countries. Can you provide any thoughts apart from the
dominance of the developed countries? I think free market economy is
the best solution, as I never came across any country getting globally
competitive without any other forms of governments, such as communism,
socialism, etc. Free market economy provides equal opportunity to
every person in their countries. Can you provide any other solutions
for the development of the 3rd world countries?

---

Clarification of Answer by skis4jc-ga on 02 May 2002 10:09 PDT

Other solutions for the development of 3rd World countries, besides
ending inequality and instating free trade:

Education
Health Aid
Population control
Introducing new agriculture/technology 
Tourism
Debt cancellation
A McDonalds on every corner J

Here are some other resources you may be interested in:

Global Debt and Third World Development
http://www.mtholyoke.edu/acad/intrel/globdebt.htm

Development and Third World Studies: Agriculture, Forestry & Animal
Husbandry
http://styluspub.com/sect8-104.html

Thank you !!!

Best,
Skis4jc

I am not convinced with that response.

The web site http://www.j-bradford-delong.net/
has a lot of material on economics and its relationship with growth and 
technology.  Growth and technology tend to distinguish poor countries from rich 
countries.

The book reviews section mentions various books, some are on
this topic
http://www.j-bradford-delong.net/Econ_Articles/Reviews/variousbookreviews.html
E.g. Guns, Germs and Steel has a theory that about the history of economic 
growth and the factors that distinguish rich and poor countries.

I read another book that said different regions had different animals and 
plants that could be domesticated and adapted for agriculture, and this was a 
strong initial factor in which countries developed agriculture.

Each part of history tends to have a different factor that is important, the 
development of agriculture was one of the early factors that decided who was 
rich and poor in the BC era. 

Guns and steel mattered in the industrial revolution.

Conflict resolution and good governance are some of the key impediments to 
investment in Africa, participants said at a New Partnership for African 
Development conference in the Senegalese capital, Dakar. 

Some countries, like Mexico and Venezuela, took out loans to repay previous 
debts. But for others, this was the first time they had borrowed from 
commercial banks. Many intended to use the money to improve standards of 
living in their countries.

In the end, little of the money borrowed benefited the poor. Across the range, 
about a fifth of it went on arms, often to shore up oppressive regimes. Many 
governments started large-scale development projects, some of which proved of 
little value. All too often the money found its way into private bank 
accounts. The poor were the losers.

In the mid 1970s, Third World countries, encouraged by the West to grow cash 
crops, suddenly found that they weren't getting the prices they were used to 
for the raw materials they sold, like copper, coffee, tea, cotton, cocoa. Too 
many countries - advised by the West - were producing the same crops, so 
prices fell.

Then interest rates began to rise, pushed further by an increase in US 
interest rates. Meanwhile oil prices rose again. The trap was sprung - Third 
World countries were earning less than ever for their exports and paying more 
than ever on their loans and on what they needed to import. They had to borrow 
more money just to pay off the interest.

 
It is estimated that the Third World pays the developed North nine times more 
in debt repayments than they receive in aid. Africa alone spends four times 
more on repaying its debts than it spends on health care. It is therefore not 
surprising that most of the 32 debt-distressed countries in the world are in 
Africa

In order to understand the debt crisis and the struggle to cancel the debts of 
the poorest countries, we must understand how it all started. We need to look 
at the huge impact on the economies of developing countries; how the West and 
Third World have responded to the crisis. 

The early 1970s saw the United States government overspending and printing 
more dollars to make up for it, resulting in a sharp fall in the value of the 
dollar all over the world.

This in turn affected the price of oil, a vital commodity that has always been 
priced in dollars. Oil-producing countries reacted by raising the price of 
their commodity in 1973. Much of the world felt the pain of this sharp oil 
price rise, while the oil producers made billions of dollars and deposited 
them in western banks.

This created another crisis in the banking sector as interest rates crashed. 
To avert total disaster, banks started lending out money to Third World 
countries that wanted to maintain development and meet the rising cost of oil 
at the same time. For more see this Oneworld partner site: 
http://www.jubilee2000uk.org/debt.html 

However to get a grip on the problem of the debt burden, one must move away 
from the figures and understand three key issues  
www.odc.org/commentary/ibaug99.html:

1. Conditionality
2. Debt service Vs Debt stock
3. Financing 
 

Best regards.

Hi

Here is an article on what Africa must do to develop:
http://allafrica.com/stories/200204230361.html

search terms used: developing countries

I'm not sure how they *can* develop, but for a lot of good reasons why
they have lagged behind the rest of the planet, you'll want to read
Jared Diamond's *Guns, Germs and Steel*:

<a href="http://www.amazon.com/exec/obidos/ASIN/0393317552/jengod05/">http://www.amazon.com/exec/obidos/ASIN/0393317552/jengod05/</a>

all these answers miss the boat.

the most accurate answer is in the book The Nature of Mass Poverty by
John Kenneth Galbraith

1. Their leaders are from among them. 2. For a people to change the
leader needs to arise and change their own people. 3. A country may be
a third economically but first in being happy and healthy (USA is far
from being first).

Bhamwhiz,

...my 2 cents, in a very complicated problem -- and all countries have
a different combination or severity of problems.

Developing countries have difficulty because they lack many things.

Infrastructure
1. the banking system -- which needs to be backed by the government
when in trouble, and thus the government needs to be solvent
2. the legal system with power and money to enforce the laws
3. the transportation system to carry out commerce efficiently
4. clean environment - making everyone sick, taxing its own resources,
and making problems that are difficult to solve once made

Mentality (habits)
1. there's too much corruption - when everyone does it, it's difficult
not to play this game to get things done (but corruptions eats the
lower classes)
2. business ethics - much of business in the rich world works because
there is a strong sense of implicit business ethics; when the majority
don't do it, the rest have no incentive to do it (similar to
corruption)
3. work ethic - very debatable subject that in warmer regions, it is
easier to relax and wait until tomorrow to do things.  In colder
regions people stay indoors, are not as social, and thus work more.
...other than the Calvinistic historical habits of, say, Americans
4. politicians - these are puppets of the whole problem. 
Unfortunately, in developing nations they go into politics to get rich
in addition.

IMF?
1. The IMF is important because it must save those who are drowning.
2. The IMF is a problem because it signals to countries if in trouble
they will be saved regardless of what they do.  It's sort of like a
rich parent with a problematic teenager.  The problem child has no
incentive to do things right because the parent will save him anyway;
and the rich parent has little incentive because it has plenty of
money to solve problems when there are crises. Besides, the problem is
so big and difficult to solve; and too much time and bad habits have
formed by that time one is a teenager.

Claudietta