Debt and the Least Developed Countries
• In Chapter 34, read the "Debt and the Least Developed Countries” section and answer the following questions:
1. What challenges face developing nations even if these nations receive loans from international investors/organizations?
2. Why might African agricultural products have a hard time finding a market (buyers) in the developed world?
The Developing Nations
• In the Chapter 34 Exercises section, complete the matching and multiple-choice questions.
The Developing Nations
Read this assignment. Then read Chapter 34 in your textbook.
What Is a Developing Nation?
A developing nation is a country in the process of industrializing. Life in developing nations is characterized by poor health care, food shortages, lower levels of educational attainment, shorter life expectancy, and an overall lower standard of living.
A developed nation has an industrialized economy with highly productive industries. People in developed nations typically enjoy a much higher standard of living compared to those in developing nations.
How Do Developing Nations Differ from One Another?
Developing nations vary greatly in the economic and social conditions in which their people live. The amount of industrialization will vary from nation to nation, as will political structures and cultural backgrounds. Read about these differences on pages 508–509 of your textbook.
Why Are There so Many Developing Nations?
A developing nation typically has few industries and hasn’t yet completed the process of becoming a modern industrialized nation. The reasons for this situation are many.
Traditional Ways
• Religious belief. Because of their religious beliefs, the people of a region or nation may not value modern economic progress.
• Fear of new farming methods. Farmers who depend on old methods to survive are afraid to try new methods they haven’t experienced for themselves.
• Attitude towards work and family. Culture and custom may require people to spend much time with the family, leaving less time for work.
• Opposition of the wealthy. Wealthy people in a developing country may be resistant to change because they’re happy with their own status.
Shortage of Capital
• Physical capital and its importance. Physical capital refers to the factories, machinery, and equipment necessary for the production of goods and services. Physical capital is needed for a nation to become fully industrialized. This capital requires investment, however, and investment requires significant savings. Poor nations find it difficult to save enough to invest in physical capital because they produce so little to begin with. Too, those with money may decide not to invest in a developing nation.
• Human capital and its importance. Human capital refers to the level of skills and experience of a nation’s workforce. It takes time and resources to train a skilled workforce, resources that many developing nations don’t have. Trained and educated workers are needed to operate an advanced and modern economy. Those that do become skilled or educated often leave the country for better opportunities elsewhere in the world.
Rapidly Growing Population
In many developing nations, the population is outpacing the nation’s ability to feed and employ the people. Although more and more people are moving to the cities for work, they lack the skills needed to get a good job. These people are forced to live in overcrowded and unhealthy conditions.
Dependence on the Developed Nations
Developing nations often look to developed nations for capital, technical know-how, and markets for their products. Investors provide financial capital in the form of loans, but such arrangements place heavy debt burdens on developing nations, which have a hard time paying the loans back.
How Are the Developing Nations Attempting to Raise Their Living Standards?
Developing nations are using several methods to bring about raised living standards for their people. Common methods are described below.
Raise Agricultural Output
Developing nations are looking to use modern technology to increase agricultural output. This machinery allows a small number of farms to feed more people, allowing more people free time to do other types of work. Another possible way to increase output is land reform. Land reform means taking or buying land from wealthy landlords and giving it to landless poor people. People who farm their own land rather than as hired workers tend to be more productive.
Slow Down Population Growth
Countries are attempting to use education and law-based policies to reduce birth rates. Fewer people in developing countries can mean more resources per person.
Accumulate Capital Goods and Technical Know-How
Building up physical and human capital makes the job of industrializing much easier. As you learned earlier, this can be difficult when a nation is poor and has little in the way of savings to begin with. Often, developing nations look to outside sources.