Is underdevelopment a phenomenon?
- 2 months ago
Underdevelopment is caused by free market capitalism. Capitalism means "everything is up to the highest bidder." If you are a poor country next to a rich country, the "highest bidder" will always be the rich country. They will quickly buy up all your industry, turning the country into a banana republic covered by one big monopoly. There would be no competition so no incentive to grow, but also, all the profits would then flow overseas, meaning less wealth to be spent in expanding industry, thus keeping the country in poverty.
That's not to say capitalism can't grow a poor economy, it just has to reject free markets. It could just ban all foreign investments and allow free markets within its borders, but this would also be a bad decision, as cutting itself off from the outside world is how you get economies hermit kingdoms like North Korea. You need foreign trade to develop.
Rather, the most efficient model is to simply throw out free market economics altogether and use the state to heavy regulate foreign investments and the internal economy, to make sure that it remains fairly competitive and that most businesses are owned locally and not by foreign companies, while also allowing foreign countries to invest where it is beneficial, but with controls to make sure they don't monopolize any industries.
This is how most Asian countries were able to rise out of poverty. South Korea used a state-capitalist method to with Five Year Plans to direct the development of its economy to grow very quickly. Vietnam is using a "socialist-oriented market economy" method and China a "socialist market economy" method.
None of them reject markets, but they reject FREE markets. Markets can create growth, but only under certain conditions, and the state has to make sure to create those conditions if it wants to have growth. Countries like Haiti remain poor forever precisely because they are a free market economy. Economics is a lot more complicated than simply pure free markets or pure state control.
- ?Lv 62 months ago
Yes, people are dying. But they are far away from us. We do not even realize them.