They are unable to satisfactorily cater for the economic, social, and other basic needs of the population. The general natire of an underdeveloped/developing society may be gathered from common economic characteristics of such society. While it may be difficult to locate a representative underdeveloped country, it is much easier to bring our some fundamental characteristics common to underdeveloped/developing societies. These characteristics include: * A low average real income and a low growth rate of per capital income. Most of the other characteristics of Underdevelopment derive from this singular ominous favtor - low per capita income.
Despite some criticisms towards capitalism, it is seen as the most successful economic strategy for a country compared to others such as socialism and communism, these successes can be highlighted by the economic development of Western countries and in which is soon becoming a global phenomenon. Capitalism has a negative geographical dimension, this is inequality. David Harvey writes in Spaces of Hope, 2000, that capitalism is “one national struggle between the classes” This highlighting that although capitalism aims to make individuals proposer, it is not a balanced concept at all (Harvey, 2000). This inequality is spatially manifested and therefore gives it a capitalism a geography. Capitalism’s economic inequality has led to a clear divide between urban and rural, this is evident in China.
The shortcoming with the first concept is that it uses only GDP or GNP per capita and would give China and Uganda the same weightage which is absurd. The second method is favoured by the neo-liberals as it produces results indicating falling inequality. The Gini coefficient fell starting from 1990s to 2007 which suggests that globalisation is reducing inequality. But again it was polarized by use of average international price structure which means that it reflected the price structure of rich countries much more highly in poor countries (e.g., domestic services), inflating the purchasing power of poor countries’ currencies. The third concept of global income distribution, measured by the Gini reflected that countries tend to form high-inequality and low-inequality clusters with high inequality cluster comprising most developing countries and low-inequality cluster comprising developed
On one hand, neo-liberals view this as largely a good thing. They say that nearly all countries have a comparative advantage in one way or another within the global economy. There will be groups who will be worse off, but on the whole, the benefits are greater than in the past. On the other hand, neo-Marxist scholars view the neo-liberal optimism with deep suspicion. Global capitalism, they believe, will only create and reinforce inequalities within and between countries (WEB: Held, McGrew).
This would be the case of very low inequality countries, which are traditionally the more developed and rich countries. As concerns the poor countries, which normally have very high initial unequal levels of income, and increase of average incomes will only explain a little percent of 0.6 in terms of poverty reduction. The conclusion is therefore that reduction of poverty levels can only be effective if national average income levels increase on the basis of having an initial level of inequality that is somewhat low. High inequality countries will have less poverty effective policies as their policies apparently do not target to reduce inequality in the first
This may be true as far as international trade laws and regulations are concerned. But, on the other hand, according to Wallerstein (2004), there is a more serious issue of trade imbalance whereby developed countries have an upper hand due to their economic strength advantage, superior manufacturing capabilities, and advanced logistics and delivery systems. In some occasions, Hurst (2008) claims that developed countries impose trade sanctions mostly against developing nations for reasons not directly related to trade such as it stand on homosexuality, prostitution, issues of religions etc. Poor nations would never do the same to their developed counterparts because they would lose more and it would even look
But even if there was a positive effect of democracy on growth, it would be spurious to neglect the relevance of other elements that could have been proved to cause growth, including human capital, diffusion of knowledge and institutions (inclusive vs extractive ones). Democracy is, therefore, not the ultimate cause of development but rather a small piece of the big puzzle that has captured the interest of economists for decades: the wealth of
What happens when any country has high income inequality? If the separation of nation’s wealth is based on the rule where a little group of people keeps the majority of a nation’s capital, the balance of pоwer in this state is skewed or deformed. Therefore, low and middle classes of society have less access to capital and less access to nation’s resources, consequently, they have low chance for breaking out the cycle of poverty. While economists all over the world think on what optimal wealth distribution actually is, many inhabitants of different countries agree that the Gini index is the most real indicator of the health and vitality of a country. The Gini index represents the main principle, which based on income distribution between country's citizens.
Question: What are the causes of inequality? Explain How does it affect the economic development of a country? Answer: There is a big difference noticed in the incomes of the people in almost all developing countries. the third world countries which have experienced relatively high rate of economic growth by historical standards began to realize that such growth had not brought any difference to the to the teeming poors of their inhabitants. Standard of living began to fall in real terms.
This is because, private sectors functions as a major tools for the growth of Malaysian economy, (Ragayah, 2008). According to Xavier, & Ahmad, (2011), as a developing country Malaysia is not capable to compete with high value-added economies. The progress of Malaysia is far behind in research and development compared to its rivals. Although many economic policies have been taken, yet income inequality still gets broader. The author criticizes that this can be due to wage growth that has not been maintained together with the economy growth in Malaysia.