THE POLITICAL ECONOMIES

OF DEVELOPING COUNTRIES
(CHAPTER 21)
SUBMITTED BY: SARA SHAHBAZ(2201022)
GUL-E-LALA(2201001)
AMIR NAWAZ KHAN (2191062)
MEHBOOB ALI SHERAZ(2201019)
SYED HASSAN MUBARIK(2201104)
CLASS: BBA-VI(A)
SUBMITTED TO: MA’AM SHAIZA PARVEEN
 DEVELOPING COUNTRIES
• Developing countries are those countries that are still in various stages of economic and
political development. Developing countries can be divided into a variety of groupings.
The position of many Latin American countries, such as Mexico, Brazil, and Argentina,
which have developed to some degree, is better than that of some others.
• Developing countries are called developing because they have far lower incomes than
developed countries. In the past decade, four countries that have been developing
quickly have acquired the name BRIC countries, standing for Brazil, Russia, India, and
China. They have called for the establishment of a multipolar world order in which they
would have more say in world affairs.
• Developing countries were once called “backward,” and then underdeveloped countries.
There are more than 190 countries in the world; of these, about fifty-six might be
considered developed. Four countries that have been developing quickly have acquired
the name BRIC countries.
 CONTD...

• Worst performers in terms of economic growth have been

the countries of Africa. Over the past decades the worst
performers in terms of economic growth have been the
countries of Africa, which, until recently, have not grown or
have grown only slowly. Some have even seen their total
output per capita decline.
• Asian countries, such as China and India, have generally
adopted policies to promote exports but African countries
lack this. African governments have been weak and unstable.
 PROBLEMS OF DEVELOPING COUNTRIES

• The problems are not unique to developing countries many of the same prob x0002
lems are faced by developed countries their severity in developing countries makes
them worth emphasizing. The main problems are
• The Political Consensus Problem
• The Corruption Problem
• The Brain Drain Problem
• The Economic Problem
• The Debt Problem
• The Population Problem
THE POLITCIAL CONCENSUS PROBLEM
• The central problem facing nonindustrial nations is what might be called the political
consensus problem. Political consensus means sufficient political order and
government efficacy so that the leaders of the state are able to rule.Political consensus
means sufficient political order and government efficacy so that the leaders of the
state are able to rule.
• In the United States, we have information availability, an educated public, cultural
unity, and a long tradition of democracy. That tradition limits individuals’ actions and
holds our society together. For example, when a political party loses an election, it
does not declare the election null and void; it accepts the election results. Developing
countries seldom have all of these qualities, and they often do not have any of them.
 THE POLITCIAL CONCENSUS PROBLEM

• When a political party loses an election, it does not declare the election null and void; it
accepts the election results.
• Both autocracy and democracy present problems for developing countries. Democracies
often lead to continual changes of government, and the general population’s will is not
always what is best for a country. Autocracies often lead to arbitrary and capricious
rule.
• The bottom line: Democracy the rule of the people is a wonderful ideal, but in practice,
“the people” have many different interpretations, and there is no one way to arrive at a
single interpretation.
 THE CORRUPTION PROBLEM
• Corruption is a way of life in developing countries.
• For example, in Mexico City, when you park your car, a police officer might ask you
for a protection payment.
• If you want to import an item, you often must bribe the appropriate authorities to
obtain permission. No bribe, no importing.
• The examples of the corruption problem are wide-ranging and are not tied to any
particular country or party within that country.
• No system clearly offers a way around corruption. Only a deep-seated conviction built
into the social mores offers some help, a conviction that regardless of the temptations,
the leader will not take advantage of the situation to amass power and wealth.
 BRAIN DRAIN PROBLEM
• Developing countries have a brain drain, a process in which the individuals who could
make a country develop leave that country.
• In the 1700s, when Western economies developed, travel was limited and individuals
tended to stay home and to consider their life in relation to their society.
• When students finish their studies, they often are presented with a choice between two
totally different economies and cultures. One offers enormous amounts of material
goods, intellectual challenge for which their training has prepared them, and excitement.
The other offers traditional values from which their foreign education has taught them to
escape, material shortages, and enormous intellectual challenges for which they have no
preparation.
• Doctors trained in India, where doctors are in short supply, are constantly immigrating to
the United States.
 BRAIN DRAIN PROLEM
• It is not all a loss for developing countries.Emigrants send
hundreds of billions of dollars to their home countries and
provide links that allow and encourage global companies
to expand into the emigrants’ home countries.

• More of them are returning to their home countries to

take advantage of business opportunities there. That
integration of economics leads to faster development for
their home countries.
 THE ECONOMIC PROBLEM
• To achieve takeoff into economic growth, a country needs to raise the level of
investment to a certain minimum proportion of the national income.
• Sometimes, because of lack of understanding, or to satisfy the pride of politicians,
countries striving for economic growth spend their available capital on the wrong
things. They may, for example, produce impressive government projects such as
national airlines or power plants, when what would help most, initially, might be
greater production of food.
• As is always the case, social, political, and economic factors interact.
• For example, many companies simply will not invest in certain foreign countries
because of the unstable governments there, and they are unwilling to pay the
bribes necessary to carry on business in such countries.
 THE ECONOMIC PROBLEM
Foreign Aid and Trade Barriers:
• When countries cannot pull themselves up by their own
bootstraps by developing internal savings and
investment, they have another option.
• They can seek foreign infusion of investment, which
can come in the form of private foreign investment or
governmental foreign aid.
• An equally or even more important part of the economic
answer is removing developed countries’ trade barriers.
• For example, the European Union provides enormous
subsidies to its farmers, who then export subsidized
farm products to countries that could have produced
them, but which cannot compete with subsidized prices.
 THE ECONOMIC PROBLEM

The Historical Legacy of Colonialism:

• When Western governments’ budgets are tight, the amount of foreign aid they give
often comes under attack. Opponents of aid argue that the developed countries
owe nothing to the developing countries. Supporters of aid, on the other hand,
point to history in providing justification not only for giving aid, but also for
giving even more than we do.
• Western countries colonized the developing countries, creating artificial political
entities that brought together incompatible ethnic groups and extracted what they
could from those countries. These developing countries were not allowed to
develop in their own way.
• In following these policies, the West created the problems that developing
countries face today.
 THE DEBT PROBLEM
• The reliance on private investment, including
loans from U.S. and other banks, has created a
new problem for many developing countries:
the debt problem.
• In the 1980s, the problem of the international
debt, the amount of outstanding loans among
different nations grew in importance. The large
borrowings of the developing countries
throughout the 1970s, together with high
interest rates, made it almost impossible for a
number of developing countries to meet their
debt obligations.
 THE DEBT PROBLEM
• In the 1990s, that debt problem was greatly reduced by debt restructuring
allowing repayment of debt over extended periods of time and a fall in the world
interest rate. In 2001, the IMF granted debt relief for twenty-two countries,
continuing the trend of debt restructuring.
• The debt forgiveness allow donations to use the money they saved to provide
healthcare, education, and other social improvements. However, in order to
qualify for the program, the countries had to comply with good governing
practices and transparency. Despite these restructurings, particular developing
countries had large debt over hangs, and paying off that debt will remain a
problem through the early decades of the 2000s.
 THE POPULATION PROBLEM
• Even if they begin to grow, developing
countries will not necessarily escape the
vicious cycle of poverty because they
face another large problem.
• As long as population continues to grow
at current rates, these countries are going
to have enormous difficulties in
increasing their per capita output, the
total output divided by the country’s
population.
 MISSION IMPOSSIBLE
(Advice to a potential leader)
• What, then, should a developing country do? Neither we nor any other social
scientist knows what to do. Advice has run the gamut of possibilities. The results
have been so bad that we are going to deviate from standard textbook policy: We do
not tell you what the experts think should be done. Instead, we are asking you what
you think should be done.
• So, we hereby appoint you a social advisor to Hopelandia.
• We begin by providing you with some general advice that we would give a potential
leader, a set of policy options to help formulate your thinking about the problems,
and some initial background information on three developing countries.
 MISSION IMPOSSIBLE
(Advice to a potential leader)
• Keep an Open Mind: Don’t rule out options arbitrarily, and douse all available
knowledge of the interrelationships, don’t try to emulate any specific developed
country, because what works for one country might not work for another.
• Recognize the Difficulties: Set goals and priorities with full recognition of the
difficulties that the development plan will encounter. Should a country grow
economically, such as maintaining its tradition and furthering its religion?
• Maintain Your Idealism: Unless you love your country and are willing to use
whatever power you have for the good of the country as well as you understand
that good, and not for your own gain or that of your friends, then forget about
being a leader and give your support to an individual who will.
 OPTIONS OF DEVELOPING COUNTRIES
• Developing countries have a variety of ways to deal with their almost impossible
problems. Let’s briefly consider their options.
• Political Options: Political options include democracy, autocracy, and various shades
in between the two. Somehow the system chosen must be one that combines the
various ethnic and regional groupings into a complete whole and makes them.
• Economic Options: The range of economic options goes from (1) a type of unfettered
capitalism, in which the government enters into the economy as little as possible; to (2)
socialism, in which individuals can operate in certain areas, but the government plays a
much stronger role in guiding the choice of each individual decision; to (3) some new
kind of economic organization that you think of. The choices are interrelated.
 OPTIONS OF DEVELOPING COUNTRIES
Foreign Policy Options:
• Countries do not develop in a vacuum.
• Other countries play a role, at times stabilizing
a regime, at other times destabilizing a regime,
depending on whether the individuals guiding
418 Global Issues these regimes are following
the other country’s goals, and on whether the
particular major power can live with the
operation of the regime to which it has lent
support.
• Therefore, you have to choose a foreign policy.
 OPTIONS OF DEVELOPING COUNTRIES
The Brain Drain Option:
• Should you encourage your top students to go abroad?
If you do, how can you be sure they’ll come home
again to use their new skills in the country that sent
them to be educated? Suppose you decide the other
way, that is, to keep your most promising youth at
home.
• In that case, how will you foster new ideas, youthful
enthusiasm, and the importation of valuable ideas and
methods that have already been developed in other
countries?
 POPULATION PROBLEM
• Facing this issue is
one of the most
difficult task
confronting human
beings
• Personal Level
• National Level
• Cosmic Level
 VENEZUELA

• Country of about 32million people.

• Independence from Spain in 1811-1958.
• Collapse of Confidence in Government in
1998.
• President Maduro Jailed opponents and
protesters.
• Population Growth rate 1.39%
• Fertility Rate. 2.32 per women.
 CHINA CASE STUDY
(CHINA BACKGROUND)

• China is surrounded by a variety of natural

barriers: the sea to the east, mountains and
desert to the southwest and north. There are
three natural regions:
• The west, an area of high plateaus and desert;
the north, an area of fertile plains; and the south,
mostly hills and valleys.
• The two main rivers, the Yangtze and the
Yellow, are both of extreme economic
importance.
 CHINA BACKGROUND

• Ninety percent of the population of China are of Han ethnicity, and 95 percent are
Chinese-speaking, although there are several dialects and a variety of other
language.
• Though now officially atheist, most Chinese practice variants of Buddhism,
Taoism, or Chinese folk religion.
• The communist takeover of the government in 1945 and its attempt to introduce
socialism into the Chinese system and culture.
• It is a federal republic with twenty-three provinces, five autonomous regions, and
Hong Kong. Describe it self as a socialist state, with the Communist Party of
China specifying the socialist ideology .
 CHINA’S GROWTH
• Starting in the late 1990s the Chinese
economy grew at a rate of more than 10
percent for well over a decade.
• In 2015, it was still growing at more than 6
percent. Its growth has pulled hundred of
millions of people out of poverty, and has
made its economy the second largest in the
world.
• China may still be a developing country, but
it is one with enormous clout and power
 CHINA’S GROWTH
• It did this with what some call a Chinese market socialism system. It allowed its
economy to be essentially a market economy, but it did not allow political
freedom.
• One of the reasons for its clout and power is that it is the largest and most
populous developing country in the world.
• Up until the late 1980s China was a planned socialist economy in which the
government controlled most of the economic activity. That changed in the late
1980s, when the government introduced markets and market incentives to try to
encourage individual production.
 CHINA’S GROWTH

• The freeing of the market in many sectors led to China becoming the world’s
fastest growing economy at the turn of the century, creating a substantial middle
class and many “newly rich” people.
• The introduction of markets has not been without problems; the income growth
has been highly skewed, and the large majority of Chinese remain poor, while a
few, including many With close ties to the government, have become incredibly
rich.
• The sense that the system is corrupt is a major concern for the Communist Party
that leads China, and it recently created a strong anti-corruption program.
 MAJOR PROBLEM IN CHINA
Population Problem:
• In the 1970s and 1980s population growth was a key concern for China, and the
government introduced a variety of rather strong policies to limit growth.
• It started with an edict pronouncing as a norm the two-child family; that edict was
soon changed to a one-child limit, and the system is backed by a variety of
economic reward for those who comply and penalties for those who do not.
• It to a significant decrease in the birthrate, and by 1982,the majority of newly
formed families in the cities were having only one child.
 MAJOR PROBLEM IN CHINA
Population Problem (Contd…):
• In 2015 China replaced its one-child policy with a
two-child policy, in part because social more had
changed and people no longer wanted large
numbers of children, in part because people disliked
it, and in part because China became concerned
about the need for more workers support the aging
population. In 2016, China’s population was about
1.4 billion.
• And it has remained relatively stable since the early
2000s.
 MAJOR PROBLEM IN CHINA
Political Problems:
• Cultural Revolution and encouraged the youth to purge the economy and society
of excesses and external influences that it felt had adverse consequences for
China.
• From the early 2000s until 2013, China grew at over 10 percent per year, which
means that China went through incredible changes.
• Starting about 2013, the Chinese economic growth rate began slowing.
• China has increased in economic strength, it has also increased its military power
and presence in the world.
 UGANDA
• Uganda has an area of 93,070 square miles and a fast-
growing population of over 37 million. Its religions are
Christian, Muslim, and a variety of tribal sects.
• Uganda developed, as a British protectorate in 1894. It
became independent in 1962, and in 1971 Idi Amin
deposed President Milton Obote in a military coup.
• In 1972, Amin expelled Uganda’s Asian population and
launched a rule of terror. In 1979, Uganda was invaded
by Tanzania, and Amin fled. (In 2000, he died in exile
in Saudi Arabia.) With Amin’s exile, the ex-president,
Milton Obote, returned to rule the nation.
 UGANDA

• Obote ruled for five years but favored his own tribe, the Langi, and in mid-1985
was again deposed, being replaced by a military man, Tito Okello, a member of the
Acholi tribe.
• In 1986, Okello was replaced by Yoweri Museveni, who turned what seemed to be
a hopeless situation, a country that existed more in name than in reality, a country
that earlier editions of this book described as a basket case into a more politically
stable country that since 1987 has continued to grow impressively.
• Most agriculture consists of subsistence and livestock farming, although Uganda
remains one of the world’s largest producers of coffee, which accounts for almost
all of its export earning.
 PROBLEM WITH UGANDA

• Uganda’s biggest problem is a lack of

political coherence. Most people depend on
agriculture for a living, although some of
the northern tribes are also wandering
herders. Illiteracy is extremely high.
• Northern Ugandan cities, such as Kitgum,
are still recovering from a civil war in
which more than 200,000 people died and
many of the population are afraid to leave
the refugee camps to which they have fled.
 PROBLEM WITH UGANDA

• An important reason for the fear has been the Lord’s Resistance Army, led by Joseph
Kony, which has been trying to overthrow Museveni.
• It has abducted an estimated 25,000 children and used them as soldiers, forcing them
to kill a parent or sibling, or to serve as sex slaves.
• In 2005, the International Criminal Court indicted Kony and other leaders of Lord’s
Resistance Army, but as of 2016 he remains in hiding in the Democratic Republic of
Congo, which has almost no government.
• In hiding, Kony’s power has significantly decreased, but stability has not yet ended
the fear.
 PROBLEM WITH UGANDA
• It should be noted that the commendable
economic performance in Uganda has not
led to political reform.
• The ruling party, the NRM dominates and
makes it difficult or impossible for other
parties to compete.
• If a competing party starts to do well, it
generally experiences a government
investigation that discovers that it has
violated a rule or law, and the leader is
threatened with jail.
 PROBLEM WITH UGANDA

• An example of the control that Museveni’s

party exerts can be seen in the election of
2006, which Museveni won handily.
• An important reason why is that his main
opponent was arrested and charged with
treason and rape just months prior to the
election. In 2011 Museveni was elected with
68 percent of the vote, although both outside
observers and internal opponents objected to
the election as being rigged in Museveni’s
favor.
 PROBLEM WITH UGANDA
• Soon after the election, the country experienced
significant inflation, stirring unrest through the country.
• In 2016, Museveni was reelected after his top
opponents were again harassed and arrested.
Museveni’s “Movement” system is a challenge to
Western scholars who support democracy as it is
practiced in Western countries.
• The problem is that in developing countries with many
competing ethnic groups, Western-style democracy
often leads to enormous corruption and civil war.
 PROBLEM WITH UGANDA

• Museveni argues that, given that reality, developing African countries need an
idealistic broad group committed to state stability and preventing corruption to
oversee the playing out of political democracy.
• He sees his Movement as providing that for Uganda, and after he leaves office, he
has called for the Movement to remain not as a political party but as an organization
overseeing state stability and preventing corruption.
• The problem is whether any group will be able to provide checks on the Movement
if they lose their idealism. More and more, Western observers who were previously
supportive see the Movement turning into an autocracy that stifles democracy.
 CONCLUSION

• In considering the choices a developing

country must make, you will see the game of
society played in its entirety.
• The individuals who succeed in making the
right choices launch their countries into
prosperity and political stability.
• Those who make the wrong choices leave their
countries in poverty.
THANK YOU