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.