Economic factors affecting development
Unfortunately poverty can lead to poverty. The diagram shows the poverty trap, which is often thought of as a cycle. Low investment in key areas such as infrastructure (roads, rail, telecommunications etc.), education and healthcare can be bad for a population.
Populations in countries at low levels of development can become more vulnerable to ill health (as we have seen with HIV and AIDs in sub-Saharan Africa) which reduces the productivity of the workforce.
In addition, a lack of education leads to a lower quality workforce, and poor road networks are not attractive to outside investors. Simple things like these can exacerbate (make worse) poverty, and keep countries mired in a low level of development.
It is very difficult to expand from a very low base, particularly in today’s very competitive global economy. In addition, countries at low levels of economic development are also more likely to be victims of civil wars and their after effects. Countries such as the Sudan, Democratic Republic of the Congo and Rwanda are good examples of this. Wars consume vital resources and divert attention away from the crucial issues for normal people, healthcare, reliable food supplies, stability, economic well-being and access to clean drinking water.
The world’s poorest countries have also been at the mercy of a global trade system designed and controlled by the world’s richest countries. Several measures put in place by the world’s richest countries mean that the world’s poorest countries are at a disadvantage;
1. Import tariffs of goods from poorer countries put the prices of those goods UP
2. Subsidies (payments from governments to the producer) of goods produced in richer countries push the prices of rich world goods cheaper. This makes it harder for poorer countries to compete.
3. The world trade system encourages a “race to the bottom”, where buyers from richer countries go from place to place around the world driving down prices because supply of goods often outstrips demand.
In addition, the lack of reliable energy supply, political stability, infrastructure and educated workforce put countries at a disadvantage. The net result in many poorer countries is that they are forced to export only lower value raw materials such as agricultural goods, whilst they buy back more expensive manufactured goods or services. Poorer countries do not have the capital to set these types of industries up.
The physical environment can have a direct impact upon the development of a place. The UK benefitted in many ways from its physical or natural environment for its rise to a global superpower during the Industrial Revolution. Its Island natural gave it a coastline to fully exploit for resources and many potential trade routes. It had the right mix of natural resources to exploit for many Industrial processes, including coal, iron Ore and Limestone. It also had a temperate climate without the extremes of weather that can damage development. Many countries are not as fortunate and the following factors can limit development;
1. Climate related disease – many tropical countries unfortunately suffer from diseases that thrive in hot humid conditions, such as Dengue Fever, Chagas Disease and Malaria. People who get these diseases are incapacitated and cannot work or may even die, limiting development.
2. A lack of natural resources – countries with few natural resources start off at a very low economic base and find it hard to create products that can sell on world markets.
3. Natural resource curse theory – this is a theory that states if a country has one very valuable resource all efforts of the country are put into the exploitation of that resource. That limits the POTENTIAL development of other industries and if the resource is in the hands of a minority unscrupulous ruling elite, the profits are not shared well amongst people in the country.
4. Being landlocked with bad neighbours – although this has a political element to it, countries that have no access to the sea are at the mercy of their neighbours. If they are “bad neighbours” who expect huge payments or have regular conflict, this can severely limit development.
5. Climatic hazards such as hurricanes and drought are more likely to strike some countries than others. For fragile countries a drought could have a devastating impact on development. The 2011 to 2012 Horn of Africa famine that affected Ethiopia, Eritrea, Kenya and Somalia had a long term impact. As well as killing and weakening people from hunger and thirst, many of these countries had to deal with a refugee crisis, diverting valuable resources away from other development objectives.
Famine in the Horn of Africa - ©Oxfam East Africa
There are many historical factors that can affect the level of development of a place. In the short term a lack of investment in education is particularly important, as many countries cannot afford to send all children to school even at a basic level. UNICEF claim that in 2006 93 million children of primary school age were not in school!
Looking at the longer term, the colonial legacy of many countries across the globe has held many countries back. Countries such as the UK, France, Spain and Germany had colonies across the globe from which they took people and resources. These processes have limited the development of these countries. Opposite is an image of mutilated Congolese slaves who were forced to work on Belgian rubber plantations under King Leopold. Such acts of vicious oppression held countries such as the Congo back.
Colonial countries also drew up borders and created countries that ignored tribal, ethnic and religious differences within those regions. This has subsequently led to conflict which also holds a countries economic development back.
Another good example here is Nigeria, a country created by the UK but struggling to cater for all of its different ethnic and religious groups.
Source of photo: King Leopold's Soliloquy: A Defense of His Congo Rule, By Mark Twain, Boston: The P. R. Warren Co., 1905, Second Edition.
By Alice Harris [Public domain], via Wikimedia Commons