Developing Countries Competing with Developed Countries

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Developing Countries Competing with Developed Countries Discuss the alternative methods that developing countries might use to overcome the difficulties that they have when trying to compete with developed countries. No industry attracted Including Foreign Direct investment (FDI) Economic development occurs when a country improves the economic welfare of its population through, for example reducing poverty. Some economists discuss the world as being the 'developed north' and 'underdeveloped south'. This refers to the gap between rich countries, which are mainly in the northern hemisphere and poor countries, which are located mainly in the southern hemisphere. This is not the only method used to categorise countries, The World Bank and United Nations classify countries into high, middle and low income countries while the International Monetary Fund (IMF) categorises countries into least developed, developing and industrial countries. I believe that many underdeveloped countries are involved in the 'cycle of deprivation', which I have shown diagrammatically above. If there is little investment in a country it is easy for a country to get caught up in the cycle and make things worse for the economy. If an LEDC (Less Economically Developed Countries) has little money available the country will undoubtedly have a poor infrastructure, this will act as a deterrent for industry to move to the area as the transport and communication will be of poor quality and will cause problems for firms. If little industry is attracted there will be no jobs available and unemployment will soar. As described in more detail below some Multi National Companies take advantage of the cheap labour in LEDC's but as they pay very low wages very little is invested into the economy and the majority of profits leave the country so there is no significant increase in investment. If unemployment is high people will turn to subsistence farming as they will need to produce food to survive so the farmers will not be making any money and therefore will not be investing in the economy. If there is little investment in the economy there will be little money available for the government so health, education and infrastructure will not improve and there is little chance that the economy will develop without external intervention as I will describe later. ... ... middle of paper ... ...id. The latter requires the recipient to buy goods and services from the donor country. The World bank and IMF (International Monetary Fund) provide loans to developing countries designed to improve their infrastructure, education and health services, restructure the economy and cope with aggregate supply and demand shocks. I feel that this policy can once again either greatly benefit a country if it is used wisely or it can create even more problems for the economy. To conclude I feel that it is very difficult for developing countries to compete globally with developed countries as they are at a disadvantage in many respects. I feel that the best way to increase the competitiveness of developing countries is to increase the development in the countries and to increase investment and this often requires external assistance. I feel that developing countries can overcome the disadvantages they face by successfully planning and using some of the policies mentioned above. The third world should not be alienated but welcomed into the global market, and only then will they not feel so daunted by the prospect of competing with the superpowers of the industrial world.

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