A Common Sense Economic and Market Structure Model for Developing Countries
For more than thirty years developing countries’ economic problems have created major financial crises in the international community. Developing countries have remained so due to their low-income economies. African and Middle East countries live in ethnic diverse communities and are subject to political instability and corruption than Asia and Latin American countries that live in more homogeneous communities. There is more cost involved in a population of workers and who belong to different ethnic groups because of diversity, cultural differences, religion and language. The purpose of this economic development model is to address economic stability, the problems (value inhibitors), solutions (value drivers), the strategies and implementations of the economic enhancement in order to help the developing countries be less dependent on developed countries. So many studies have been conducted on developing countries, but none of the studies have focused on how the developing countries could apply or use the economic models with less participation of the industrialized countries. World Bank and United Nations ought to examine minutely any potential foreign aid application while focusing on this model for developing countries. This model will enhance in devising a strategic means of monitoring the developing countries before distributing fund to those that may not use the model or practice noncompliance. The practical sense of the use of this model is to elevate the developing countries to economic success and stability, and reduce their dependency on developed countries.
Role of leadership
In developing countries, most leaders behave and think differently. Although, these may not be tolerated by developed countries, they are the norm and are based on their ethnicity, beliefs, religion, culture, social classes, and assumption of supremacy. Negotiating and managing conflicts in developing countries is a matter of understanding the genetic makeup of that country. Diversity may create needs but these needs do not have to be neglected in order to create balance among the ethnic or sectarian groups. A Western countries’ style of negotiating and resolving conflicts may not be applicable in the developing countries where religion and ethnicity have continuously impacted the leadership in those countries. Hence, the inefficient and ineffective leadership have led to social development and economic neglect that have caused the worse economy and poverty in those areas. If politics are set aside and economic benefits are put in the forefront by these developed countries, the chances of conflict resolution will be increased.
Leaders who have vision for change may think about what the impact the economic and market development will have in the long-run, and in the locations and in the life of its citizens. The social problems in Malaysia exist because of the ethnic Chinese who are not Muslim in a country where over 90 percent of the population is Muslim.
In developed countries, situations create focus on civilization and leadership, where civilization shapes leaders and leaders shape civilization. Power is treated as a shared resource, but in most developing countries coercion is the system used by leaders. Leaders use physical, economic, and social threats and punishments to induce change in followers for the sake of the leaders. The leaders therefore have become power wielders. These leadership problems have impacted the economic and market structure of the countries. Hence, a new model may mean a step to a new and better way of life for all the developing countries. The Western part of the Asia continent is predominantly Muslims and still have untapped resources that have not been explored because of dictatorship, politics, religion, culture, beliefs, and diversity. Exploring these countries and helping them stabilize will transcend to trading with other developing countries, which will in turn pull them out of poverty, instability, and create peace among the sectarian and ethnic groups.
Before the coming of the tsunami in December 26 2005, the South Asian countries were poor and developing. Both the South and East Asia have untapped economic sources. These potential raw materials need to be explored in order to help develop the economic and market structure of the region. The tsunami destroyed the infrastructure, economy, and the lives of the people of the South Asian countries. The 6.3 in magnitude earthquake that hit the central java of Indonesia on May 27, 2006 destroyed what was left of the tsunami. These countries will benefit from cash crop, livestock, and poultry production because of their adequate weather and availability of natural water, which will not require a high technology in order to irrigate the farmland. Mechanized farming will need to be introduced and implemented to aid in maximizing production of agricultural products. The Eastern part of South Korea has a comparative advantage over industrial, commercial, and manufacturing production. Producing and trading on building, automobile, motorcycle, and other petty materials in the form of buying and selling will enhance in the development of the market setting and economy. This will help in the stabilization of the East and South Asian countries. A stable economy will help resolve and manage conflict in these countries that have different ethnic groups and history of diversity. The economic and market structure may also aid in the stability of the leadership, political and social system. The environmental problems may need to be addressed in order to guard against pollution or any unhealthy by products or waste materials that may cause harm to people or have short or long term health problems or may be fatal to people. If these countries are stable, they will attract foreign investments rather than needing foreign aid. The military disturbances in East Timor are not helping the economic and the market structure of the young independent country.
The four factors that determine the economic growth are labor, capital, land, and Entrepreneurship. Developing countries have more labor force with lower wages than developed countries and yet their economic growth is still lower than that of the developed countries. Capital is another problem facing developing countries. They need resources such as equipments, machines, factories, and money to work with. Labor without capital is synonymous to guns without bullets. Capital will also represent an investment that will pay off in the future. Most developing countries have untapped resources such as oil, gold, diamond, minerals, forests, and water that represent land which by themselves cannot stimulate economic growth unless they are explored and converted to goods and services. Technology enhances economic growth. A group of agricultural researchers from Texas A&M University and University of California-Davis acquired a four-year grand of $4.4 million from U.S Agency for International Development’s Mission to Afghanistan eGrazing. This discovery will aid the livestock herders to successfully tend to cattle, sheep, horses and goats. If this system had been in place, it may have made an impact during the tsunami in Indonesia. Political and social factors that inhibit Economic Growth are corruption, instability, lack of leadership and administrative skills, population growth, and lack of business enterprises.
African countries are very poor and in dare need of economic and market structure development. Before these countries go global, they may to have sufficient needs of life by taking comparative advantage of their sources of raw material. Some have cash crops that need to be irrigated, some have livestock and poultry that need to be technologically upgraded, and market structure that needs to be redesigned, developed and implemented. The improvement of the agriculture will help the poor farmers send their children to school, build infrastructure, develop the quality of institutions, and make a smooth run of transportation.
Middle East region is a turbulence area because of instability associated with religion, oil, dictatorship, and developed countries’ influence. The Iraq war has devastated the whole region, and couple with the Israel, Palestinian, and Lebanese conflict, which has created further economic drawbacks that amount in billions of dollars. The destruction of the infrastructures, and the lost of lives have sent the economy of Lebanese country decades backwards.
Development in Latin Americans countries could stem from agriculture, forestry and fishing, to mining, and manufacturing. These Latinos can help in building their countries rather than trying to immigrate to United States of America. If guided, they will improve their countries’ economy and help in the marketing of agricultural, manufacturing and other natural resources. Immigrants spend much time in the state of California farms, Illinois factories, North Carolina, and areas in the north east of United States of America working mostly in food industries. These efforts can be redirected to Latin America in order to develop the entire area.
Political struggles, lack of administrative skills, and power supremacy have strangled the economic and market structure of most countries in Latin America. For decades the Latinos have traveled north of the border to United States of America in search of better lives. This economic situation has resulted in the deaths and mutilations of people trying to enter United States of America. The smugglers who are known as the “coyotes” have made huge profits for attempting to transport these illegal Latinos across the border. It is very dangerous ventures because of the hot temperature, train transportation, unhygienic felt, bad weather, lack of food, water, and other unknown dangers along the road to the border. Immigrants spend months traveling to the border and most times do not make it to United States because they are caught and send back south of the border. Most gang groups have resorted to kidnapping wealthy Latin Americans living in the United States side of the border for huge ransoms, demand thousands of dollars in exchange to the kidnapped victims and most of the times these victims are killed. Families are separated due to fractured economy when men live their families for years in search of money for food in the north of the border. Income is not redistributed to the population, the rich gets richer while the poor gets poorer. The people of Latin Americas deserve more from their leaders and their natural resources, which has not happened because of corruptions and drug kingpins who have operated by intimidation, coercion, and fear.
The Four “Pies” facing developing countries
Poverty stems from lack of education, opportunities, and low literacy level. These countries do not put too much emphasis in education as they resort to marrying more than one wife and having too many children. Farming and herding have been their main source of food production and livelihood. Ethnicity is attributed to too many tribes, languages, and dialects. It has also contributed to lack of trust amongst different ethnic groups due to lack of understanding each other’s culture and tradition. They have become one country but different people. Instability is created by lack of a stable government by corrupted leaders, who always come to power for the purpose of stealing funds. That ultimately leads to no mandate to build infrastructure, and develop the economy and market for the country. When people’s needs are not met, most of the times in developing countries, rebellion begins when the government neglects a certain group of people. When people are deprived of the necessities of life while the other group has it all because of their ethnicity and religious sect, it creates tensions that lead to a “time-bomb” ready to explode. These most times cause conflicts that are attributed to hatred, sabotage, riots, revolution, and deaths. This is common in the developing countries where corruption and venality have played a role due to self-centeredness on the part of the leaders. Leaders therefore resort to intimidation of their citizens and thereby control these countries by coercion.
17 Strategies for implementing economic and market structure in developing countries
(1)A comprehensive education across the country needs to be instituted. This may be in the local dialect and language in order to make it easy for the citizens of that area. Assessment test of individuals’ talent and abilities need to be explored, recognized and documented to be sure where these individuals’ maximum potentials lie. A program needs to be instituted in order to teach the citizens methods of family planning and birth control. Individuals also need to understand the social and economic benefit of the birth control.
(2)Some individuals may have ability in agricultural work (Crops/livestock/Poultry). Locations with fertile lands need to be located and utilized for crops and livestock, and those areas without fertile land may need to be used based on its comparative advantage, such as poultry, storage of byproducts, and market areas.
(3)Supermarkets are to be constructed in all densely populated locations or urban cities to enable the young men and women find and keep jobs. The stores will consist of three shifts so that students can work and at the same time go to school and do their schoolwork. These markets will be located in the areas where people can afford to shop. A Wal-mart (USA) approach will be most appropriate in these locations. The four utilities of market will have to be considered and instituted as the main reason for the location of the supermarkets.
(4)Consideration of the product that people will want, the price to set for the product, the place that will be appropriate for the supermarkets and their nearness to the people, and how the promotion of the product will be conducted in order to reach the consumers and customers.
(5)The nomadic approach of rearing, transporting, and selling livestock will be changed to using trucks to transport them if it involves long distance in order to avoid spreading of any diseases such as mad cow disease and other diseases that come from livestock feces as they are transported though out the country. Trading locations where buyers and sellers meet, and the days to meet are to be established in both rural and urban areas.
(6)Areas where people still live in poverty, a trade by barter may be established so as to allow the farmers who want to exchange items from their farms to bargain for exchange. This short-run method will continue until the economic development is in place and running.
(7)Foreign investment and property rights need to be considered as part of encouraging investments and savings in order to stimulate the economic growth. This method may help the developing countries to invest less money on capital goods, create more competitive markets, and in turns reduce or eliminate corruption.
(8)Establish local leaders by ethnicity, who will act as representatives or middlemen between the government and their ethnic group. These local leaders may be selected by group they represent and approved by the government to ensure they are working on behalf of the people they represent and not for their own self-interest. In addition, the African experts may be contracted to help establish the boundaries of no corruption.
(9)Individuals have certain religious beliefs and different ways of thinking, and as such need to be segregated according to their sect for the benefit of market structure and economic development. Individuals who understand that certain groups have designated times in which they pray will have no problem doing business with such groups. This may reduce tensions for those who understand the culture of those religious group, and for those, who do not there will be tensions and uneasiness, which is the reason for grouping citizens according to their religious sect.
(10)Government need to institute “watch dog groups” in order to police the programs and to make certain that the programs are in place and running. A 3-year trial needs to be established for any program of economic and market structure that is implemented for these countries. This is enough time to evaluate the program in place in order to ensure its workability. Experts in Africa need to be involved in all phases of implementation in order to combat corruption and promote stability.
(11)Poverty may be reduced if adequate and stable structure for economy and market is established, and the government leaders via the local leaders address all citizen’s problems. The essential necessities — housing, clothing and food – may be the top priorities for these countries in order to reduce the poverty.
(12)Professionals and skilled workers are to be encouraged through issuance of incentives in order to motivate them to stay and reside in these developing countries and help in the development of these countries rather than leaving for developed countries. Mass exodus from these developing countries only harms and delays the development of these countries.
(13)Construction of infrastructure such as roads, buildings, and bridges are important for the economic and market structure of developing countries. Food products and other necessities of life can be transported to their respective destinations as quickly as they are needed when good infrastructure is in place. It may also encourage in foreign investments. Investors will prefer to invest in stable countries to unstable countries.
(14)Construction and installation of adequate running water in developing countries and to all parts of the countries also will help in building stable economic and market structure. It will help in curtailing diseases such as typhoid’s and malaria that usually come from unclean water. It will also help the children to focus in education and literacy programs rather than traveling miles upon miles to fetch water from the streams and wells. Some of these children die in taking these water-fetching adventures.
(15)Installation of electrical system may help in the growth of communities. Businesses cannot operate adequately where electricity is lacking. As such, these countries will require electricity in all areas of the countries as a form of economic development and market structure in order to help businesses function and grow, help in the food storage, and eradicate waste of food products that would otherwise be stored safely in cold rooms and refrigeration.
(16)Social Organizations need to be introduced to help the poor get out of poverty, and give them the opportunity to operate their own small businesses. This type of organizations are set up by the government as not-for-profit organizations, and the purpose is to develop the people’s business skills and issue them interest free start-ups loans to enable them manage their own businesses, which in turn lead them to poverty free. They will guided them to the type of businesses to open, how to open them, where to open them, and why they should open those kinds of businesses.
(17)The potential goals may be achieved by enforcing the use of this model as a condition of receiving funding or foreign aid. As a way to check and ensure that monies do go to what they are intended for, developing countries pledge to use and implement this model. This model will check and police the development of the projects. The intention of this requirement is not to discriminate against developing countries, but to help the citizens of those countries as they have no way of benefiting from these funding and foreign aid that usually end up abused, misdirected, and misused for other personal and private purposes by the leaders due to corruption and venality.
Who Are the Developing Countries
World Bank defined developing countries as those with low-income economies with per capita incomes of $755 or less. World Bank is an International Organization that categorizes such countries as developing countries and also issues loans to them.
A Common Sense Economic and Market Structure Model for Developing Countries
About the Author
Dr. Sidney Okolo is a professor, consultant, strategist, and Africa expert. He is affiliated to several universities and the Managing Director of International Business Associates, a management consulting firm, and also the CEO of Global Education Support, an education assistance program.
Among other things, he engages in all aspects of learning, knowledge, organization and human change. His focus is on leadership, management, entrepreneurship, profit engineering, human potential, excellence, achievement, business strategy, research and development. Product management, change management, conflict management, athlete management, marketing, business development and operations. He works with clients to adapt to change due to change in factors of production, technology, goods and services. He engages clients in training, retraining, development, skills enhancement, association, behavior modification, ways of thinking, and attitude adjustment. In addition to his work in the United States of America, his focus is also on developing countries in the continent of Africa, their leadership, culture, economic and market structure, community planning and development, and his created four letter word, “PIES”, which stands for: poverty, instability, ethnicity, and sectarianism.