Short Essay on Economic Growth Developed and Undeveloped Countries

The general expectancy in these countries of a continued rapid economic development is part of commonly shared assumptions on the basis of which national life evolves towards ever higher realization of democracy and national integration.

It is on the whole the industrialized countries which are industrializing further. By far the greater portion of the world’s total saving originates in this smaller part of it where incomes are high.

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As new inventions are constantly raising the demand for capital almost all the available capital is invested there. If one counted as home investment also the expenditure on building up the closely controlled enclaves for exploiting oil and mineral resources in the poorer countries, this would appear to be the case even more completely.

In the underdeveloped countries, on the other hand, where incomes are so very much lower, capital formation and investment tend generally to be smaller, even relatively to their lower incomes. For equality in rate of development, they should instead be relatively bigger, since in the poorer countries the natural population increase is usually faster.

The faster population increase is a result of a particular relation between fertility mortality rates, where both are on a very high level, which, in addition, tends to make the age distribution of their populations relatively less advantageous.

As a consequence of all this and of the tradition of stagnation which has entrenched itself in their entire culture their economic development usually proceeds more slowly. Many of these countries have during recent decades moved backwards in average income.

Important Points to Remember about this Essay:

1. In developed countries economic growth never slackens.

2. The business slumps are temporary followed by full utilizations of labor and other resources.

3. The rapid economic development is a part of ideas that result in the evolution of democracy and integration in these nations.

4. Industrialization needs to further industrialization fully absorbing capital resources at home and in poorer countries for exploiting oil and minerals.

5. In underdeveloped countries, incomes being low investments are low. They can compete only if they are big.

6. The age distribution of labor is less advantageous because of high birth and death rates.

7. Their lethargic culture slows development so much that average income has gone down in many.

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