Competitionis essential to the functioning of markets, and encourages innovation,productivity and growth that can create wealth and reduce poverty. Yet, marketsdo not always function properly and uncompetitive markets are often those usedmost by the poor countries. Thecurrent causes of underdevelopment include, but are not limited to, thefollowing: geographical factors, political factors, and Cultural and Socialfactors. The essence of development occurs when, “wealth depends on trade, and tradedepends on infrastructure, and infrastructure in turn depends on investment”.
1Withthat being said, can poor countries become competitive with the factors thathave an affect on their country? This paper outlines the causes ofunderdevelopment and strategic methods that can assist poor countries to becomecompetitive. The first cause of underdevelopmentis geographical factors that include climate, location, resources, andstability. Climate becomes an issue for many of the poor countries that residein the hottest region of the world. Not only is it hot year round but also theland becomes less fertile, short supply of water is available, and diseasesthrive in these climates. Therefore, the country has to put twice the amount ofeffort for agriculture to flourish.
As for location many countries are inlandlocked positions. Meaning, some countries have ports available toimport/export goods while others simply do not. The country than loses theopportunity to profit on goods and services.
Although, poor countries havenatural resources they can capitalize on, the lack of infrastructure puts thecountry at a disadvantage. Lastly, lack of stability; if a country is notstable due to natural disaster, how are you able to sustain infrastructure? The second cause of underdevelopmentis political factors that include poor management, corruption, and politicalinstability. “Governments need to do lotsof things to encourage development – they need to build and maintaininfrastructure, and raise and spend finance wisely, on the right projects”.2 If the government does not sustain infrastructure businesses will not build inthat country’s location. “Corruption is a dishonest or fraudulent conduct bythose in power, typically involving bribery”.3 With the abuse of power occurring in thesecountries, the need of new leadership is obligatory. To conclude politicalfactors is political instability.
Political instability “could be ethnictension, tribalism, or all out war”.4As a result, it is difficult for countries with long-term conflicts to developbecause it is unfavorable investments and its destabilization of the country. Thethird cause of underdevelopment is cultural and social factors that includeculture, discrimination, and population.
Culture has its effects on countries due togender roles and religions. For example, “If you don’t believe that women should work, you haveeffectively halved the earning potential of your country”.5Culture correlates with discrimination because discrimination against a certaingroup of people can slow down productivity in a country. Population becomes anissue because you have more people with fewer accommodations. According toJeffrey Sachs, “With fewer children, a poor household can invest more in thehealth and education of each child, thereby equipping the next generation withthe health, nutrition, and education that can lift living standards in futureyears”.6As a result, population hinders the development for poor countries. Although, the causes of underdevelopmentvary throughout each country does not hinder the country from beingcompetitive. “A business environment thatfosters national competitiveness pays dividends across the board.
Whatever itsstage of development, export strategies that support innovation and use oftechnology will help a country move forward”.7In order for a developing country to be competitive it must be aware of itsstrengths and weaknesses in following sectors, “The existence of resources,business environment that invests in innovation, demanding local market, andthe presence of supporting industries”.8 “Fair competition matters for both economicgrowth and for reducing poverty”. 9For instance, assisting markets to work better by taking away unneededdistortions to competition can result in reforms of the business environment. 1 Williams, J.
(2017, October 16). Geographicalfactors that affect development. Retrieved January 21, 2018, fromhttps://makewealthhistory.org/2007/07/01/geographical-factors-that-affect-development/ 2Ibid3 4 Williams, J. (2017, October 16). Geographical factors thataffect development.
Retrieved January 21, 2018, fromhttps://makewealthhistory.org/2007/07/01/geographical-factors-that-affect-development/ 5Ibid6Ibid7 Cornelius, M. (2003, January). A Country’sCompetitive Advantage. Retrieved January 21, 2018, fromhttp://www.tradeforum.org/A-Countrys-Competitive-Advantage/8Ibid9