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8/6/2019 Development Gap and Its Bridging
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WHAT ACCOUNTS FOR THE DEVELOPMENT GAP BETWEEN THE DEVELOPED
COUNTRIES AND THE LESS DEVELOPED COUNTRIES? SUGGEST WAYS BY WHICH
THIS GAP COULD BE BRIDGED
The term development gap is used by social scientists to refer to developmental
differences that exist between mainly the western rich and industrialized
countries and the poor third world countries. The developed countries consist of
countries to the north and east of the Brandt Line, whereas the less developed
countries comprise of about 152 countries geographically south of the line. The
so-called Brandt Line was first used in 1981 in the report of the West German
Chancellor, Willy Brandt. That report sought to geographically demarcate
between the global north and global south.
Defining Development
Gunnar Mydral (Journal of Economic Issues, 1974; pg 729) defined development
as the upward movement of the entire social system. According to him the social
system includes economic factors as well as non-economic factors including all
sorts of consumption by various groups of people, as well as the combined
consumption of society. In plain language development can be considered in
three contexts namely social, political and economic
Measuring Development
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There are various indicators in these contexts to which one can point to and in
order to be able to say country A is more developed than country B. While it is
quite easy to point to a rich country it is not necessarily the yardstick to measure
development. For example a global south country, South Africa with a Gross
Domestic Product, GDP (2010) of $277.46 billion appears richer than the global
north Bulgaria which had a GDP of $96.79 billion (Wikipedia, Internet
Encyclopedia, June 3, 2011). Although the GDP per capita for Bulgaria ($12,851) is
bigger than that for South Africa ($10,136), in terms of Purchasing Power Parity,
PPP South Africas per capita amount can do more than that for Bulgaria. That
Bulgaria is considered a developed country but South Africa is not in the face of
this fact may sound implausible but fact is, a combination of factors go into
determining the development status of any country. How is the wealth
distributed among the population? How many of the adult population are
literate? What is the child enrollment ration in primary, secondary and tertiary
schools? What about access to health services? Development therefore is a
complex issue involving socio-politico-economic factors. The United Nations, UN
and other international development institutions use three indicators to measure
development. These are the GDP, the Gross National Income (which like the GDP
measures the total value of production plus production from foreign
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investments), and Human Development Index, HDI (a composite index based on
life expectancy at birth, adult literacy rate and school enrollment, and GDP).
Now, the gist of the economic development gap between the developed and the
underdeveloped worlds can be seen from the facts below. The GDP for the whole
African continent for 2009 was about $500 billion which ranked 17th
after the GDP
for the Netherlands. The developed Global Norths 56 countries with a population
of 1,029 million, growing at a rate of 0.4% (2005 2015) have a combined GNI of
$37,529 billion equivalent to $37,529 per capita whereas the Global Souths 152
countries with a population of 5,489 million growing at a rate of 1.2% average
(2005 2015) have a combined GNI of $10,978 billion equivalent to $2,000 per
capita (Kegley Jnr, C. W; World Politics, Trend and Transformation, Table 5 pg
126). Thus the combined economic strength of 56 countries is more than three
times that of 152 countries!
Reasons for the Gap
Colonialism
The genesis of the whole saga of underdevelopment in certain continents is the
issue of colonization. Countries that formed the nucleus of the first world and
incidentally developed industrial economies first namely, United Kingdom, France,
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Germany, Spain, Portugal, and Italy were the same countries that scrambled for
colonies in Africa, South America, and South Asia. It is not by coincidence that
these areas of the world constitute the Global South or less developed countries
of the world. The colonizers adopted a policy to plunder the natural resources to
enrich their various countries, and even in some cases the human resources (as
slaves) to provide the necessary labour for their development projects.
The colonizers constructed roads, built bridges, railway line and ports to facilitate
the collection of raw materials and export them. The legacy they left in terms of
education and political system did not also help the development of the Global
South countries. The educational system inherited from the colonial masters was
not development oriented. There were very few if any business schools to teach
entrepreneurial skills as well as technical and polytechnics to train middle level
technicians needed for national infrastructural construction. The colonizers
needed teachers for primary and middle schools and that is why they set up so
many training schools. They were only interested in training people who would d
manual work for them (Ake Claude, Democracy and Development in Africa).
Corruption of Leaders
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Corruption of leaders has long been an issue in many less developed countries,
especially in Africa. Right from the post independence era to date there is high
perception of corruption in officialdom. The political legacy inherited after
independence was that of absolute and arbitrary power in a statist economy. This
situation made the quest for political power a fierce contest full of acrimony
among the elite politicians. According to Claude Ake political intensity was further
reinforced by the tendency to use state power for accumulation. This practice was
associated with the weak material base of the new political leaders, who had
been economically marginalized by the discriminatory economic policies of the
colonial regime. They had little or no experience of entrepreneurial activity and
little or no capital when they came to power. Invariably they had to explore the
one leverage they had: control of state power to strengthen their material base
(Ake C; Democracy and Development in Africa pg 9).
Thus right from post independence many African leaders used political power to
amass wealth. This trend has continued to date there is so much talk about
corrupt government officials. In Ghana for instance the perception is very high
because people who hitherto had almost nothing to write home about start
acquiring properties and live ostentatious lives soon after joining government.
The third and fourth in rank of the first five of the 10 most corrupt leaders in the
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past two decades are Africans. They are Mobuto Sese Seko who was accused of
embezzling $5 billion followed by Sani Abacha whose figure is put at $2-5 billion.
These are the biggest so one can imagine that there are several hundreds that do
not reach the international media. Nonetheless corruption is an important source
of drain of national wealth which could otherwise be used to improve the quality
of lives of several citizens.
Poor Planning and Incompetent Management
Poor planning or the lack of it in Ghana, the rest of Africa and other poor LDCs is
certainly one of the reasons for underdevelopment. It is unbelievable that in
present day Ghana several streets have no names and houses are given arbitrary
numbers that do not fit into any logical system. Electricity line are running
everywhere, roads can hardly be widened without having to demolish buildings
built through toil and sweat. When new layouts are made no allowances are
made for play grounds, community centers markets, lorry stations etc. The
District Assemblies look on helplessly while physical development goes on
haphazardly without the least regard for safety, necessary accesses to hydrants
etc. There is a saying that if you fail to plan, you plan to fail. Governments over
the years have not made sure that the responsible institutions perform their
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statutory roles effectively. Metropolitan, Municipal, and District Assemblies are
exacting taxes from people who have illegally occupied unauthorized spaces
thereby condoning and legitimizing these wrong practices. Managements of these
state organs who are not performing rightly cannot be said to be competent but
in Africa the non-performing sycophantic managers are rather commended and
rewarded with long tenure. The blame can be placed at the doorstep of the
Ministry of Local Government and Rural Development which also has supervisory
responsibility for the Metropolitan, Municipal, and District Assemblies.
Lack of Entrepreneurial Skills
Having followed the flawed educational legacy from the colonizers, most LDCs
have not been able to produce graduates with relevant entrepreneurial and
technical skills required for moving their countries from subsistence agricultural
based economies to industrial and consumer based ones. In Ghana for instance
successive governments have either played politics with the education structure
or paid lip service without doing enough to effectively transform it to reflect the
needs of todays markets. The result is that there is so much unemployment in
nearly all LDCs and particularly, Ghana where this is evident through mass street
hawking, graduate unemployment, and teeming youth without employable skills.
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Every student wants to get a university degree to be employed by others without
thinking of self employment because the universities do not teach
entrepreneurial skills. Technical schools which some twenty to thirty years ago
produced the core of technicians and artisans for the production sectors have
now become a thing of the past. Nearly all the famous ones have either collapsed
due to low enrollment or lack of facilities and equipment. The combined effect of
the situation is that artisanal work and the small scale sector are not able to
provide the required base for national industrialization effort.
Poor Labour Discipline
LDCs are invariably characterized by poor labour discipline. The time
consciousness of employee, attitude toward work, respect of laid down
regulations and procedures leaves much to be desired. In Ghana for example
people try to justify lateness to functions by saying Ghanaian time implying the
Ghanaian time is always some 30 minutes to one hour later than the officially
indicated time. One can easily find workers leaving for break 30 minutes before
and resuming 30 minutes after the officially indicated times. The irony is that
people do these things with impunity, as if nothing is wrong with the habit. It is
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therefore no wonder that productivity is generally low, just as remunerations are
also low.
It is commonplace that the years between 1300 and 1650 saw within the
intellectual culture of western Europe important changes in the apprehension of
time (Lewis Mumford, Technics and Civilization, 1934), Cipolla Carlo M, Clocks and
Culture, 1300-1700; 1967), (Hall E. T; The Silent Language, 1959). From the
previous paragraph it is clear those employees in less developed countries,
especially those in Africa who perceive their incomes to be too low do not
appreciate the monetary value of time. If they did they would rather bargain for
less hours work commensurate with their incomes (perceived as low). As far back
as the mid 17th
century English commercial farmers like Henry best of Yorkshire
very much appreciated the money value of time and thus calculated labour
output in terms of daywork (Robinson C. B; Rural Economy in Yorkshire in 1641
).
Ethics at the work place is another aspect of labour indiscipline which affects not
only employees but the employers also. Although there have been recorded
unethical issues leading to failures of big time businesses like Enron in the
developed world, there are several unrecorded unethical behaviours of
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management personnel in LDCs and particularly Africa that contribute to
indiscipline and low productivity at such workplaces. There have been instances
of sexual harassment, shady deals involving contracts and other financial
transactions. Often the lack of uprightness of management personnel removes
their moral courage to sanction subordinates who indulge in similar or other
unacceptable behaviour for fear of blackmail.
Falling Commodity Prices and Unfavourable Terms of Trade
The advanced and industrialized nations have taken over the core business of
manufacturing capital goods and essential items that fetch lots of money while
they have assigned, as it were LDCs to the periphery where they can only produce
primary goods (mainly raw materials) to feed the industries in the advanced
countries (Handelman H; The Challenge of Third World development, 2000),
(Baer, W; The Economics of Prebisch and ECLA, 1969), Andre Gunder F; Capitalism
and Underdevelopment in Latin America, New York Monthly Review Press, 1967),
(Baran P; The Political Economy of Growth, New York Monthly Review Press,
1957). The value of primary goods is low and to make matters worse the
industrialized countries or their agents determine the prices to be paid for such
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goods. The effect is that LDCs produce lots of tones of primary goods but earn
little.
Global commodity markets are increasingly dominated by fewer global
transnational corporations that have the power to demand low producer prices,
while keeping consumer prices high, thus, increasing their profit margins.( Ziegler
J; The Right to Food, Report submitted by the Special Rapporteur on the right to
food). Low incomes from primary exports are a problem indeed to LDCs. Over the
past two decades the prices of nearly all the major agricultural commodities
declined in real terms. According to UNCTAD, comparisons of the prices of
agricultural raw materials and food and beverages in 2003 with 1980 prices show
a drop of 60% and 73% respectively. Coffee prices in 2003 were a mere 17% of its
1980 value, and cotton prices were 33% (Ibid; p.126). One of the effects of these
price declines is the deterioration in the terms of trade for commodity-dependent
countries that far from benefiting from trade liberalization are encumbered
with greater debt. From 1997 to 2001 alone, the combined price index of all
commodities fell by 53% in real terms, that is, commodities lost more than half
their purchasing power in terms of manufactured goods (UNCTAD, Economic
Development in Africa: Trade Performance and Commodity Dependence, New
York and Geneva, United Nations, 2003, p.19; United Nations, World Commodity
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Trends and Prospects. Note by the Secretary General, United Nations General
Assembly. A/57/381. New York, United Nations, 2002.) It is in this context that
UNCTADs regional economic development report on Africa, released on 26
February this year, focuses on the pitfalls of commodity dependence in a world of
declining agricultural commodity prices, arguing that the commodity trap has
become a poverty trap. (UNCTAD, Economic Development in Africa, p.46.)
The social devastation wrought by these price declines which translate into
falling farmers incomes, lower wages and debt is also recognized. As the Report
of the Meeting of Eminent Persons on Commodity Issues organized by UNCTAD
immediately after Cancun states: We note with dismay the extreme poverty into
which 25 million coffee farmers and workers have been thrust by very low prices (
UNCTAD, Report of the Meeting of Eminent Persons on Commodity Issues,
Geneva, 22-23 September 2003, p.4.). Similar though much more sanitized
expressions of concern emerge in an increasing number of UN reports dealing
with poverty, trade and commodities. Added to this is the renewed interest in
international commodity agreements - 57 years after the UN Economic and
Security Council recognized the need for price stabilization measures to overcome
the social and economic impact of short-term price volatility on world markets. It
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seems are actually geared towards the achievement of United Nation Millennium
Development Goals. However, CSOs would better serve society if governments
would properly coordinate their activities and assign them to appropriate state
bodies just to ensure standardization and quality in their projects.
Trade liberalization encouraged increased production, leading to overproduction
that pushed down prices, driving down farmers incomes and leading them to
attempt to produce more to maintain their livelihoods. As the experience of the
cocoa trade illustrates, attempts align domestic and world prices to ostensibly
give farmers improved prices generated some contradiction between the two
goals since the increased production from liberalization would lower the world
price, thereby lowering the price the cocoa farmer actually received.( ul Haque,
Commodities Under Neoliberalism, p.8.) This vicious downward spiral is
reinforced by the system of competition. And this is where the social violence of
the market the constantly escalating pressure on farmers and workers to
produce more for less appears as aforce, not a benign set of opportunities.
Inappropriate Policies
In the face of globalization sometimes LDCs are pushed to adopt or formulate
policies that are inimical to their own economic wellbeing. A well documented
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instance is the low prices for primary commodities discussed in the foregoing
paragraphs. By necessity LDCs have to be members of the World Trade
Organization, WTO because they risk losing access to international loans from the
World Bank and the IMF. Now being a member of the WTO requires signatory to
certain negotiations that may not be in a countrys interest per se. Sometimes
countries have to comply with quotas, stringent export conditions etc before they
gain access to other members markets. In Ghana for example when the previous
New Patriotic Party government appropriately responded to save the collapsing
local poultry industry by raising tariffs on imported poultry, the same government
had to back off under pressure from international bodies that the government
was reneging on its duties under free trade policy. In as much as governments are
obliged to lower tariffs under free trade, leaders of LDCs should explore way and
means by which they could protect their local industries so that they can create
employment for their citizens. In Nigeria for instance it is not allowed to import
packed or bottled fruit drinks into the country. Importers are allowed only to
bring the concentrate from which the drinks could be prepared. This policy is
saving the local fruit packaging industries.
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It would be worthwhile for LDCs to give some leverage to local industries in the
areas where they have comparative advantage rather than widely opening their
borders because of WTO conditionalities or globalization.
Low Levels of Technical Assistance
Technical Assistance is foreign to LDCs other than grants, purpose-specific loans
and other forms of financial assistance. They often come in the form of capacity
building programs, scholarships, exchange programs etc. As a result of the
proliferation of International organizations and international civil society
organizations operating in LDCs the levels of technical assistance coming directly
from the developed countries are falling. A lot of aid is donated to these
international organizations for their developmental work in the LDCs. Considering
the risks of misapplication, misappropriation, and embezzlements existing among
those at the helm of affairs in several LDCs it is sometimes better to channel some
of the aid through technical assistance.
The demand for and current global recession have all contributed to the decline in
technical assistance. This trend is seriously undermining the capacity building
efforts of the international community as one of the most effective ways of
tackling underdevelopment. Technical assistance gives the unique advantage of
hands-on experience to participants from LDCs in dealing with real life issues
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Such experiences leave indelible imprints on the sub-conscious minds of those
involved to the extent that they always recall such experiences.
Bridging the Gap
Reduce Over-reliance on Aid
LDCs should come out of the illusion that foreign aid, structural adjustments
prescribed by the international organizations, strictly following the policies of the
United Nations, the World Bank, and the WTO are the steps to progress. It is time
for LDCs to take their destinies into their own hands, work hard, reduce
corruption in high places as well as in small organizations. Political leaders should
consult with bureaucrats in the various ministries, analyze issues and choose
solutions or lines of actions that would first of all, put the interest of the citizenry
at first before international relations.
Encourage Local Consumption
People should eschew the habit of consuming or developing tastes for foreign
goods under the guise that everything local is not good. The governments of LDCs
should encourage their peoples to develop the culture of accepting and believing
in what is made at home. This could be done by using the Standards Boards to
impose and actually enforce very high standards for products entering their
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countries. This will raise the cost of those products so that they would no longer
be competitive.
Increase Savings and Investments
Governments of LDCs should encourage savings from the people by dialoguing
with the commercial banks to raise interests on deposits. Also governments
should discourage cash payments to even the low income earners so that the
banking culture would be accepted by all. Another difficult but very important
issue is using credit cards to buy from the markets and supermarkets. In Ghana
one can say a lot of progress is being made in this direction with the introduction
of all sorts of card brands by the banks. When people accumulate enough capital
through savings they could team up to establish businesses or do so alone.
Teach Entrepreneurial Skills
The teaching of entrepreneurial skills in universities and university colleges will
also encourage many people to set up their own businesses. With time some of
these would grow like Ford, Toyota etc to give more employment to others and
also help grow the economy. The training of middle level technicians is also
important for every developing country. In this direction the opening and
expansion of more polytechnics not just for awarding degrees but to enrich their
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technical programmes to attract more people into certificate, and diploma
courses that will increase the productive base of the economy.
Food Sufficiency
Governments of LDCs will do well to increase their food sufficiency by
encouraging many of their youths to go into agriculture and food production.
Cash crop production should not be de-emphasized but farmers should be taught
how to inter-plant them with food crops. Food sufficiency will reduce the food
import bills and divert the money into other productive sectors of the economy.
Increase School Enrollments
All LDCs should realize that the best strategy to fight poverty and safeguard the
health of their peoples is to increase access to education by increasing school
enrollment in accordance with the millennium development goals. When more
people receive secondary education health bills will reduce because many more
will understand hygiene and avoid unhealthy eating etc.
Improve Infrastructure
Governments of LDCs should also aim at improving the infrastructure especially
roads, railways, and waterways to facilitate the flow of goods and services in their
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countries. When there are improved road networks there would be more
regional business and trade among the rather small countries in Africa.