Economic development in low income countries Essay

It is no secret that despite the breakthroughs in international economic dynamics, development is still elusive to some of the world’s poorer countries. However, current trends indicate that some of these low income nations are actually faring much better than others. Countries like China, Vietnam, and India might be well on their way to economic prosperity. The purpose of this paper is to identify the current aspects that affect economic progress and identify existing trends within those aspects. This paper gauges the sensitivity of low income countries to such trends. In particular, this paper discusses the aspects of globalization and education; the parts that each of these aspects play in determining the economic fate of low income countries. In the continuing rise of globalization, lines that have previously separated nations are now being blurred. The advent of free trade a few decades passed has increased not only economic, but cultural interactions among countries worldwide. These developments preview a globalized perspective of the economy, where the concept of nation as an economic barrier because of tariffs and trade regulations may no longer apply. If we look at how low income countries fare in the light of a globalizing world market, there are varied effects that can be observed. The influx of multinational corporations into countries of the third world brought about by the prospect of more affordable labor boosts employment rates and strengthens these countries’ current economic standing. Countries like India, Vietnam, and the Philippines currently thrive on jobs provided by various outsourcing corporations from the United States and Europe. On the other hand, some countries tend to suffer trade abuse from countries with stronger markets when it comes to the lowering of trade barriers. Without trade barriers on foreign products, the local companies of poorer countries find it much harder to compete with their foreign counterparts. The larger companies obviously have greater capital and can afford to lower prices much more than local smaller companies. On the other hand despite the lowering of tariffs in the countries where larger companies are based, smaller companies from other countries who want to enter into those markets still have a hard time. A good example of this can be seen in the case of China and the Philippines. China’s booming economy exported goods worth over $18. 6 million into the Philippines in 2005 while the Philippines was only able to export $2. 3 million (Rogers, 2006). Clearly, smaller companies in the Philippines are sorely outclassed by Chinese capital and cheap labor. China has is in fact making remarkable market headway in the international arena despite the prevailing low average income per annum of U. S. $2,040. With regards to direct investment, smaller companies yet find themselves outgunned once more by their larger competitors. Direct investment allows large companies to infiltrate chap labor markets where smaller companies operate. They are able to offer higher wages to workers from smaller companies owing largely to wide differences in capital which is boosted more by differences in foreign currencies. On the other hand, smaller companies neither have the ability nor the need to expand their workforce and operations into other countries. Foreign direct investment is not only useless to them, but it also creates an avenue for their workers to be pirated by larger foreign companies. Therefore it can be concluded that globalization is value neutral when it comes improving the economy of low income countries. Both India and the Philippines experienced long colonized rule which resulted to staggering economies in both cases. Yet after their freedom from their respective conquerors, the economics as well as other aspects of advancement in either country took different turns. Economically, India lagged behind the Philippines for many years proceeding World War II, but India’s investment in education eventually paid off. The Indian government sets aside as much as 55% of the national budget for the development of basic and tertiary education from since 1968 (Basham, 2005). The Philippines also allocates considerable budget in education but rampant corruption in the country prevents any authentic development from occurring. As a result, the country fared consistently low in successive Trends in Mathematics and Science Studies examinations conducted in 1999 and 2004 (Basham, 2005). The trends brought about by education reflect the quality of labor that a country has to offer and consequentially, the strength of its economy. While outsourcing western companies still obtain services from the Philippines for their call centers and medical transcription needs, they go to India for specialized and technological professional services. Therefore it can be concluded that advances in education equate to advances in a country’s economy. It also holds true that countries that make considerable genuine investments in their education system develop a citizenry that fares relatively better in the international job market than countries who do not. In conclusion, there are indeed varying rates of economic development present in low income countries. These rates are partly dictated by trends in globalization and in education. It is imperative for less developed countries to take heed of their neighboring countries’ actions and follow suit, or risk being left behind by a rapidly evolving world economy.