Contemporary Economic Systems: A Regional and Country Approach

By Nicholas V. Gianaris | Go to book overview
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12 Development Strategies, Convergence, and Integration


There are some seventy-seven developing or third world countries with great diversity among them, regarding the stage of development, per capita income, traditional conditions and institutions, and public- versus private-sector activities. Some of them are small, some large, and almost all of them overpopulated. Many of them had been under colonial rule for many years. All of them struggle to convert their economies from a poverty level to a more advanced stage through rapid industrialization and growth. Although many developing nations have achieved political independence, some economists and politicians think that economic domination of the former colonies still exists and that monopoly capitalism will selfishly continue to exploit them.

The main problem of these poor countries is how to alleviate the poverty, hunger, and illiteracy of their people. Economic development, that is, growth and structural change, requires new institutions, new industries with modern technology and skills, and sociopolitical changes. Economic growth and change, in turn, require investment in plant and equipment, as well as investment in human beings. But developing countries have a high propensity to consume, because of high rates of population growth and low per capita income. This leads to a low level of investment and low productivity, so that it is difficult for these countries to escape from the vicious circle of poverty, 1 regardless of what economic system they follow.

Moreover, lack of entrepreneurial and labor skills, large inequalities in income and wealth, high rates of unemployment and inflation, political instability, and varying cultural conditions make exclusive reliance upon the market or the planning mechanism for the development of poor nations doubtful. Developing countries such as Mexico, Argentina, Brazil, India, Thailand, Egypt, and Kenya


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