Competition
is essential to the functioning of markets, and encourages innovation,
productivity and growth that can create wealth and reduce poverty. Yet, markets
do not always function properly and uncompetitive markets are often those used
most by the poor countries. The
current causes of underdevelopment include, but are not limited to, the
following: geographical factors, political factors, and Cultural and Social
factors. The essence of development occurs when, “wealth depends on trade, and trade
depends on infrastructure, and infrastructure in turn depends on investment”. 1With
that being said, can poor countries become competitive with the factors that
have an affect on their country? This paper outlines the causes of
underdevelopment and strategic methods that can assist poor countries to become
competitive.

            The first cause of underdevelopment
is geographical factors that include climate, location, resources, and
stability. Climate becomes an issue for many of the poor countries that reside
in the hottest region of the world. Not only is it hot year round but also the
land becomes less fertile, short supply of water is available, and diseases
thrive in these climates. Therefore, the country has to put twice the amount of
effort for agriculture to flourish. As for location many countries are in
landlocked positions. Meaning, some countries have ports available to
import/export goods while others simply do not. The country than loses the
opportunity to profit on goods and services. Although, poor countries have
natural resources they can capitalize on, the lack of infrastructure puts the
country at a disadvantage. Lastly, lack of stability; if a country is not
stable due to natural disaster, how are you able to sustain infrastructure?

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            The second cause of underdevelopment
is political factors that include poor management, corruption, and political
instability. “Governments need to do lots
of things to encourage development – they need to build and maintain
infrastructure, and raise and spend finance wisely, on the right projects”.2 
If the government does not sustain infrastructure businesses will not build in
that country’s location. “Corruption is a dishonest or fraudulent conduct by
those in power, typically involving bribery”.3  With the abuse of power occurring in these
countries, the need of new leadership is obligatory. To conclude political
factors is political instability. Political instability “could be ethnic
tension, tribalism, or all out war”.4
As a result, it is difficult for countries with long-term conflicts to develop
because it is unfavorable investments and its destabilization of the country.

            The
third cause of underdevelopment is cultural and social factors that include
culture, discrimination, and population.  Culture has its effects on countries due to
gender roles and religions. For example, “If you don’t believe that women should work, you have
effectively halved the earning potential of your country”.5
Culture correlates with discrimination because discrimination against a certain
group of people can slow down productivity in a country. Population becomes an
issue because you have more people with fewer accommodations. According to
Jeffrey Sachs, “With fewer children, a poor household can invest more in the
health and education of each child, thereby equipping the next generation with
the health, nutrition, and education that can lift living standards in future
years”.6
As a result, population hinders the development for poor countries.

            Although, the causes of underdevelopment
vary throughout each country does not hinder the country from being
competitive. “A business environment that
fosters national competitiveness pays dividends across the board. Whatever its
stage of development, export strategies that support innovation and use of
technology will help a country move forward”.7
In order for a developing country to be competitive it must be aware of its
strengths and weaknesses in following sectors, “The existence of resources,
business environment that invests in innovation, demanding local market, and
the presence of supporting industries”.8

            “Fair competition matters for both economic
growth and for reducing poverty”. 9
For instance, assisting markets to work better by taking away unneeded
distortions to competition can result in reforms of the business environment.

1 Williams, J. (2017, October 16). Geographical
factors that affect development. Retrieved January 21, 2018, from
https://makewealthhistory.org/2007/07/01/geographical-factors-that-affect-development/ 

2
Ibid

3

4 Williams, J. (2017, October 16). Geographical factors that
affect development. Retrieved January 21, 2018, from
https://makewealthhistory.org/2007/07/01/geographical-factors-that-affect-development/ 

5
Ibid

6
Ibid

7 Cornelius, M. (2003, January). A Country’s
Competitive Advantage. Retrieved January 21, 2018, from
http://www.tradeforum.org/A-Countrys-Competitive-Advantage/

8
Ibid

9

x

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