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Opinions of Friday, 5 June 2009

Columnist: Baafi, Alex Bossman

Problems in the developing world

(By Alex Bossman Baafi)

Many developing countries have made it a duty over the years to develop their economies and improve upon the economic well-being of their people. Those countries have therefore been employing in one way or the other, the elements of economic development which include capital formation, labour productivity and investments in technology among others. These efforts however have not yielded the desired results because the problems of developing countries are many. The writer has identified some problems that are associated with virtually all of the developing economies.

Attitude

The first problem that hinders progress in our struggle for economic growth and development is our attitude. The people, especially the political and economic leaders, must become receptive to new ideas and new ways of doing things. Studies have shown that where they have been receptive to change, progress has been more rapid for example India showed much more willingness to adopt new approaches in the early 50s and has now become one of the powerful emerging economies to be reckoned with. We must remember that people who work only to live as their grandfathers did are certainly not susceptible to economic development. New social, economic and political institutions are required to encourage private enterprises if developing countries are to find the target of economic emancipation. For example, our attitude towards work and time is not the best as compared to the advanced world.

Population pressures

Where the size of population is pressing against national production, further growth is more a liability than a benefit. The problem then is to prevent such a continued rise. In Ghana, demographic statistics put our annual population growth rate at averaging 2.7 percent. Governments in the developing countries should make it a duty to educate the public on the need to control their population size. This is because, once the adults of procreating age see the possibility of increasing the standard living of their families by restricting births, they will do so. As long as it is not understood that a reduction in births will raise their standards, there is little incentive or efforts to restrain the growth of families. I believe the time has come for us to take a critical look at certain traditional practices like the polygamous marriages which breeds fertile grounds for mass children production. I believe because of our traditional family systems (extended family systems), population pressures lead to higher dependency ratios, mass unemployment, rural urban migration, lack of adequate social amenities and infrastructure not to mention the social vices associated with lack of development.

Perhaps as a long-run solution, we should strive to raise productivity relatively faster than the rate of population increase as was done in the developed world in the nineteenth century. I believe that some of the population pressures may be relieved even in the short-run if the government intensifies and encourages birth control and we will be making some headway if we sell it to the people as a pre-condition of improving upon our economic development.

Capital formation

It has been said of the developing countries that the basic reason for us being poor is our poverty. Perhaps this is true in the realm of capital formation. Developing countries have very little capital investment and the incentives which must exist for both savings and investment functions are woefully lacking. On the side of the supply of capital fund, there is little ability to save, because the levels of real incomes are low. The low levels of real incomes are the result partly of low productivity which in turn results from lack of capital. On the side of the demand for investment fund, the incentive to invest in developing countries is low because of smallness of market, lack of political and economic stability and virtually the non-existence of an enabling economic environment. The major problem of capital formation is how to generate it domestically without leading to inflation. When the redirection of resources to capital formation is done by the government financing through a budget deficit, the possibility of inflation exist. Many countries have employed this as a means of popping out of the poverty trap, but unhappy results have arisen on the other count. Among others, there are no simple solutions to the problem of capital formation. Private saving and investment, government spending, and some foreign capital are needed to provide economic growth in developing countries. However, the successful use of these depends heavily on the political will of the government and quality of public administration in these countries.

Public administration

Generally the public administration of developing countries is not of the best quality. Civil servants are frequently ill trained and underpaid. They often rely for their livelihood on payments for their ‘connections’ and on their ability to use their offices to squeeze others. Many are part of a bureaucracy filled with clannish people, friends, relatives, or party supporters of successful office-holders. Such officials are so driven by their desire for prestige and power such that they spend large amounts of time carrying political favour instead of working effectively. The officers especially the political and economic leaders are spin professionals who politicize serious socio-economic problems to their advantage. They use their offices to oppress the poor by taxing them excessively but those elite who are in the better position to pay taxes evade them. For example when the ‘big man’ (political leader) reaches the toll points on the motorways/highways he goes without paying but the poor is made to pay.

Who pays for the maintenance of state bungalows as well as utility bills in such properties and what happens to the incomes of the occupants in the developing world?

Development programmes including projects are designed to bring prestige to the people in government. Public works, projects and developments are planned and executed to provide personal monuments rather than public service. Although a cancer in the world, the level of corruption is appalling in all sectors in the developing countries where square pegs are put in round holes yet quality results are expected.

In the midst of the entire problems, there are those who have genuine experiences and new ideas to advise or assist but they face the problem of the winner takes all or ‘he who is not for us is against us’ attitude while the political leaders presiding over poor quality public administration which may be either incompetent or unable to carry effectively the functions necessary to the development process. The inability is sometimes the results of obstacles stemming from the social mores, customs and traditional religious beliefs or unwillingness to think outside the box. Suggestions

In conclusion, to surmount the above problems, more institutions for health and education, more effective and efficient public administration, political administration more representative of the will of the people with good governance, changes in the land tenure system, extension of rural credit assistance to farmers, modernization of business procedures, mechanisms of capital formation and the changes in the usual size of families are required. We also must strive for high living standards and greater economic stability by curbing corruption, improving upon our infrastructural assets base to attract both local and foreign investments. For example Dubai in the Far East is now one of the leading commercial and tourists destinations in the world because of the availability of world-class infrastructure in terms of roads, railways, hotels, and aviation as well as ICT facilities.

I know it will be a challenge to change the attitudes, normal habits, unproductive traditions and religious beliefs of the people within a short period of time. This is because the changes will lead to certain people losing certain privileges and power, nevertheless, we must not lose focus and press ahead now otherwise our efforts to move the nation forward to achieve a middle income status in the near possible future will be a mirage.

Email: abkbossman@yahoo.co.uk