Outline and suggest reasons for the issues facing countries at very low levels of economic development

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Outline and suggest reasons for the issues facing countries at very low levels of economic-development

Countries with low levels of economic development are defined by the United Nations as having three main problems; low income, human resource weakness and economic vulnerability. These come from a multitude of factors varying from the geographical position of a country to the political factors within a country. This makes it very hard to understand or know whether to help them or leave them to develop themselves. However what is clear as that LDC’s do face major challenges. The most serious of risks is the poverty cycle but there are also risks of corruption from any aid given and also the long term economical problems that can be faced if this occurs. There numerous factors to be considered and many different organisations and governments see different routes to the problem. There are some examples of countries that have grown in wealth seemingly on their own with minimal help from developed countries. Overall therefore there is much debate to both the need for countries to help and the affect this has, although there is no debate that countries at low levels of economic growth face great challenges.

One of the main suggestions for them needing help would be to encourage and allow them to trade. This is because many developing countries have less capital and skilled workers than more developed countries meaning the goods they produce are of a lower quality than other countries. This therefore makes it harder for them to trade and if taxes and tariffs are added on top of this then they will find it very difficult to trade. Therefore developed countries need to encourage them to trade as this will help employ more people in that country. This will improve the living standard within a country as more people will begin earning a living and can then begin to escape the poverty cycle and send their children to school that can become more skilled in the future. It’s also worth noting that it is often cheaper to employ people in poorer countries meaning goods can be produced for import to developed countries at a lower cost than if employed internally. Therefore this will encourage TNC’s to enter the countries and begin setting up factories and sweat shops within these countries. An example of this is Nike in Vietnam who has a very large factory. The average wage for a worker at this factory is 55$ a month, over three times the local average. This allows people to increase their personal wealth, buying mores goods and therefore due to the accelerator affect, the economical model that says for every dollar spent within a country the effects of this are much greater than a single dollar, and there will be a much greater increase in wealth throughout the country. Nikes factory also means that workers have a clean, safe job rather than the seasonal agricultural work they are used to which can also be affected by the fact that monsoon rains in Vietnam can destroy crops meaning a lack of food for large numbers of people. They also stop child labour, a big worry for TNC investment in developing countries s Nike do not allow under 16’s to work on their clothing or under 18’s on their shoes. This means that children cannot drop out of school to work for them and this, along with other factors has meant that more Vietnamese children are in school than ever before. Therefore it seems imperative and important for both governments to encourage trade and to encourage TNC’s to invest in these countries as these can increase the money earned by people within the country and also provide a more stable job reducing the affects of natural disasters or climatologically related issues.

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However there are suggestions that there is no need for countries to invest in developed countries as they have large amounts of mineral and natural resource wealth. In Sub-Saharan Africa, the area of the world with 30 of the worlds 59 LDC’s in, the UN has said that there is an ‘abundance of natural resources there’. This suggests that there are plenty of resources for the country to use to develop by trading these with other countries. Most specifically China who already buys half of all metal traded out of china. This can be seen as bilateral trade between China ...

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