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Economic Growth Strategies for Developing Countries

Economic Growth Strategies

A Purview on Economic Growth Strategies for Developing Countries

A developing country is one where the per capita income is low relative to that of fully developed countries. In human terms developing countries typically have major population percentage with poor health, low levels of literacy, inadequate dwellings and meager diets.

The key to development rests on four fundamental factors namely human resources, natural resources, capital formation and technology.

economic growth strategies

Human resources:

A lot of poor countries are forever running hard just to stay in place. Even as a developing nation’s GDP rises, so does its population.

So it becomes a mammoth task for such nations to overcome poverty with birth rates so high. Equitable distribution of wealth cannot happen in an economy unless and until it becomes self sufficient. One strategy will be to curb the population, even if such actions run against prevailing religious norms.

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Strategies for Developement

Economic planners in developing countries lay great emphasis on the following strategies of development with regard to human capital:

  • Control disease and improve health and nutrition
  • Improve education, reduce illiteracy and train workers
  • Above all, do not underestimate the importance of human resources.

Literate people are knowledgeable and resourceful; their analytical skills help them to weigh the pros and cons of specific social situations that affect their standards of living.

Asian countries like India and China with exploding population figures are in a situation to invest their human capital for productive purposes.

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Natural Resources:

Some developing nations with meager endowments of natural resources such as land and minerals have to divide the available resources among the dense population.

Perhaps the most valuable of all the resources would be arable land, as most of the people in developing countries employ themselves in farming, which is the primary economic activity.

Hence the productive use of land with appropriate conservation, fertilizers and tillage will go- far in increasing a poor nation’s output.

More over land ownership patterns are a key to providing farmers with strong incentives to invest in capital land’s yield. When farmers own land, they are more willing to make improvements, such as irrigation systems and undertake appropriate conservation practices.

The governments have to think in these lines if their economy is based on agricultural activity:

  • Farmers should be appraised about modern farming techniques and provided with farming equipments and fertilizers at subsidized rates. Note:-nothing should be given as free as freebies make them lethargic and unmotivated.
  • Much of cultivable lands are being destroyed for commercial purposes which have to be checked.
  • Power generation and supply should be copious and uninterrupted as farming, solely is dependent on availability and usage of ground water. Pumping of water is done through jet pumps and electric motors.
  • Budding population can make a marked difference in the field of farming, as it is impossible for a nation to generate white collar jobs for everyone and it definitely elevates the capacity of youth from being mere employees to that of owners.
  • Organic farming has found a place for itself in international market and human capital of developing nations can be employed in research and development of new strains that will facilitate to capture the global market.

Capital formation:

Rates of productive capital formation are low in developing countries because of deprived income; little can be saved for the future. The financing of growth in poor countries has always been an unstable link in the productive mechanism. Countries should definitely have a balanced and cautious approach when they plan to finance ambitious development programmes as they will be forced to borrow heavily from other developed countries or the World Bank.

Technological change and innovations:

This is often associated with investment and new machinery. It offers much hope to the developing nations in as much as they can adopt the more productive technologies of advanced nations.

This requires entrepreneurship. When we say that countries must encourage rapid growth in capital and technology, it does not answer how these key ingredients are to be deployed.

The desire for rapid economic growth may be strong, but developing nations have to face so many obstacles such as political opposition, want of technology, capital intensive markets and so on.

So the right approach would be to liberalize the economic policies and allow foreign investors to step into the domestic environment, resulting in increased job opportunities for local unemployed population and exposure of domestic market to global competition.