• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

The agricultural, industrial and international economic policies that were prevalent during the early periods of development hindered the growth of the developing countries.

Extracts from this document...


By Oytun Pakcan The agricultural, industrial and international economic policies that were prevalent during the early periods of development hindered the growth of the developing countries. Extension, taxation and pricing policies used in agricultural policy, use of capital-intensive technology and import-substitution method as the dominant strategy of industrialization in industrial sector and the heavy external debt that was induced by the international economic policies at that time stifled the economic development and growth of the Third World countries. The model of economic development that was perceived by the economists of early development period resulted in the establishment of economic policies that concentrated only on per capital growth of GDP rather than the development of the rural and urban areas as well as the all sectors of the economy as a whole. This resulted in an artificial and temporary growth of few sectors of the economy while all the other remaining sectors were faced with severe poverty. During this period, agriculture was merely viewed as a source of surplus production that supported industrialization rather than a source of growth and employment. The agricultural policies of the early development period encouraged urban bias; and concentration on urban development, harsh agricultural policies geared towards agricultural sector and neglect of rural areas have pushed resources away from activities which could help the growth of the rural sector of the economy. ...read more.


The lack of support towards the traditional agricultural sector slowed the growth of the economy as a whole as well as increasing the rural poverty. Harrod-Domar theory of economic growth states that the rate of growth of GNP is determined jointly by the national savings ratio and the national capital-output ratio. In the developing countries, the voluntary savings are small since the average income of an individual is low. The wages of the workers were kept low in order to ensure that the industries made maximum profits. Savings are needed in the economy, which can in turn be used to finance the growth of industries. Hence, the governments had to induce "forced" savings through taxation. The economic policies of the governments encouraged capital-intensive technology where the amount of labor involved was also low. This has lead to a high rate of unemployment among the labor force. This has resulted in the expansion of the informal sector; yet the government policies were so biased towards large-scale industries, this informal sector has had no incentives to establish themselves. On the other had, most of the 3Rd World Governments has encouraged industrialization via import substitution, the production of consumer goods in domestic markets in order to substitute for imports. ...read more.


The high inflation that occurred in many of the developing countries also reduced incentives for the productive use of investable funds, and incentives for productive investment were damaged by the decline in economic activity. Consequently, all the mentioned factors above have impeded the growth of the developing economies and delayed the economic development of 3rd World Countries. The agricultural and industrialization policies of the early development era slowed-down the growth of the developing economies and increased both rural and urban poverty while the international economic policies that were prevalent during that time increased foreign debt which has led to further problems of growth and scarcity. Capital-intensive, import-substituting and urban-biased growth that has been induced by the government policies has only resulted in increasing the rural poverty. The destruction of the traditional industries and over-emphasis on modernization of industries within a short period of time has disrupted the growth of the developing economies. The ever-increasing foreign debt due to deteriorating TOT has been a major consequence of inadequate international economic policies of the developing countries. As a result, during the early periods of development, the growth of the developing economies has suffered while the foreign debt and poverty of the populations got out of control and increased significantly in the 3rd World Countries. 4 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Production - Location & Change section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Production - Location & Change essays

  1. Marked by a teacher

    The Scott Report and the Making of the Modern Countryside - 'How penetrating was ...

    5 star(s)

    Those in rural areas lost out on industrial developments due to it being prevented neither did The Central Planning Authority secure the proper balance of national interest. Agricultural workers' housing needs were simply not taken into consideration in the post war years.

  2. The Role and Importance of Agriculture In the Carribean. Organisations involved in its ...

    They are owned and operated by the farmer and family labour is used. They produce for local markets and use simple hand tools e.g. hoe, fork, and cutlass. Distinguishing Features of Farms (According to Produce) Crops Farm These farms are of all sizes and produce a variety of crops for the local and possibly export market.

  1. Arthur Lewis's dual-sector model of development.

    The further increases in population beyond Y results in negative marginal product and decreasing average product until absolute physical minimum subsistence level is reached. The second and third assumptions of Lewis imply that the labor could be transferred from non-capitalist agricultural sector to capitalist sector without affecting the volume of

  2. Compare 5-year plans' industrial development with the collectivisation agricultural development.

    The production targets and the provision of machines of the collectives were directed by the state according to the needs of the district and of the Soviet Union as a whole. Peasants sold their produce to the government at low price and received wages for work.

  1. The Industrial Revolution

    In 1774 the industrialist Michael Boulton took Watt into partnership, and their firm produced nearly five hundred engines before Watt's patent expired in 1800. Water power continued in use, but the factory was now liberated from the streamside. A Watt engine drove Robert Fulton's experimental steam vessel Clermont up the Hudson in 1807.

  2. Opportunities in the big emerging markets (BEMs) such as India, Brazil and China.

    government officials is not prepared for entry into the country as a whole. This firm's strategy may work in the South but its success in the North or North East will depend on negotiations with authorities local to that region and with local distribution networks.

  1. The Industrial Revolution.

    The changes also began at different rates within the different industries. Steam engines were being used to pump water out of mines before 1710 but not until 1780 were they employed to drive textile machines. Also there were industries that hardly needed power at all, like pottery.

  2. Proposal for Development of Petrol Chemical Plant on Jurong Island.

    Raw material is silicon. LA pool of skilled labour is needed to run machinesry and to manufacture wafer. Enginneres and researchers needed for R&D. High comsumpution of water and electicity. Processes Wafer fabrication refers to the multiple processes that a wafer goes through to become an integratred circuit product.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work