Reasons for Economic Development
There are a number of reasons suggested for why some economies have remained less developed than others.
• An over-dependence on agriculture to provide jobs and incomes.
More people in less developed economies work in farming than in industry and services compared to developed nations. They practice self subsistence farming, and only produce enough for their own consumption. There is very little to live on, and no surplus to sell or trade. In some areas, the land becomes unsuitable for farming and barren over time, as there has been over farming. Lack of rain due to global climate change also limits the growing and production of crops.
• Domination of international trade by developed nations.
It has been widely argued that rich countries exploit poor nations by buying up their natural resources and crops at extremely low prices, and then, using the same resources to produce goods and services which they then export back at high prices to these underdeveloped nations. In addition to that, developed nations practice protection of their own industries through the supply of subsidies into their agriculture and mining industries. This increases the global supply, and forces down world prices. Poor nations are unable to compete, and as a result, lose sales, incomes, and jobs.
• Lack of capital
When incomes remain low in poor countries, they do not have enough capital to invest in factories and to purchase machinery and equipment to develop an industrial base. They then, cannot produce more goods and services, which they could export.
• Insufficient investment.
Many people in poor nations do not have access to basic education, training and healthcare. There is also low levels of investment in infrastructure, eg; roads, rail and communication networks. This makes travel and access to rural areas, and the sharing of information very difficult.
• Lack of efficient production