Developing countries are countries that have common characteristics such as relatively low living standard, poor industrial sector, and low human development index. The main indicators of development of a country are per capita income, GDP, literacy rate, life expectancy, and the developing countries have a low level of the following indicators or even lack of them. Therefore, poor countries that are intended to achieve the economic progress and provide comfort for their people must primarily implement the imitated development models of Western and other advanced economies and give priority to economic growth. The advanced countries, regardless of their principle of economic development, and even under condition of sacrifice in matters of social and cultural development, can be considered the foundation of the theory of modernization for the development of countries.
Keywords : GDP, economic development, indicators of development, social, cultural, implementation, growth.
The economic development is one of the main goals of every country. Every country tries to achieve economic growth by means of deferred income taxes and to promote the provision of social welfare. The concept of development is a very broad one; the economic development, being the part of the whole concept, is discussed in various contexts such as the social, the political, the cultural, the mental one, etc.
During different periods of human life, many thinkers and scientists presented various theories regarding to economic development and ways of its achievement. Different societies always tried to use their abilities in different ways for the purpose of expansion of their economic and political power. In order to start and advance the process of economic development of a country, it is necessary to conduct a thorough scientific study all of its social, political, economic, and historical fields and, using this assessment, to identify the most important obstacles to development, as well as the methods of their elimination. It requires an effort.
- The concept of economic development
The concept of economic development means the economic growth side by side with some fundamental changes in economy and increasing production capacity, including physical, human and social capacity. The economic development implies increase in production together with concurrent change of social institutions and attitudes, with continuously and dynamically growth of ability to use the existing resources, as well as with implementation of innovations. In addition, one can also say about changes in the structure of production and relative share of inputs in the production process. Development permeate the society and cannot affect just an only part of it; it has no definite boundaries and ceilings, but it is a qualitative phenomenon due to its dependence on human. Unlike the economic growth, which is quite small, the development has no limits.
- Indicators of economic development
The most important indicators of economic development are the following:
– Per capita income index
Per capita income index is calculated by dividing a country's national income by its population. The level of economic development is revealed by using this index and comparing the country's per capita income with the same indicator of the developed countries.
– Fair indicator of purchasing power
Based on this index, a set of available in one country prices is considered and used to evaluate the cost price of goods produced in other countries.
– Stable income index
This method implies the inclusion of environmental costs incurred during production and economic growth in the national accounts (either as damage, or as an improvement in resources and the environment) and then the rate of growth and development is calculated on this base.
– Human Development Index (HDI)
This index was introduced by the United Nations in 1991 and is calculated based on the following indicators: real per capita income (based on purchasing parity index method), life expectancy (at birth) and access to education (which is a function of adult literacy rate and average school attendance rate).
- Common characteristics of developing countries
– Relying on imports from other countries
Developing countries often need to import industrial and semi-industrial goods, as they do not have enough facilities and cannot produce these goods domestically, and thus they cannot become self-sufficient.
– One product
These countries have an ability to produce and export an only product, and raw materials account for most of their exports.
Duality means that the structure of these countries consists of two dimensions, the traditional one and the industrial one, and there are endless differences between for example the city of Nishin and the village or between different classes of society.
– Low standard of living
Developing countries are always at a low standard of living. That is, they have lack of basic and appropriate facilities for life.
– Low level of labour productivity
The labour productivity of developing countries is lower than one in developed countries, because the working people of the first ones do not have full knowledge of production. Moreover, the lack of sufficient facilities in their lives causes them not to be fully accurate in doing their work.
– Low level of employment
Developing countries have not any work environment for people; most of the time, they prefer relationships to criteria, and people are hired to work.
- Barriers to economic development in developing countries
– Void periods of poverty
This means that an undesirable phenomenon takes on a permanent form in a country, and, being a self-reinforcing situation, this undesirable phenomenon becomes perpetual.
– Insignificant capital accumulation
The major obstacle to economic development in transition countries is the lack of capital, which in turn leads to poverty and unequal distribution of income. Large incomes in this country are widely linked to a particular class.
– Social and cultural barriers
The organization of social and cultural conditions is such that the problem becomes an obstacle to economic development. These conditions are not flexible.
– Agricultural straits
The agricultural sector cannot adapt the workforce to new technologies, so it show its opposition to these changes and does not pave the way for economic development.
– Specialized workforce
These countries are dealing with unskilled labour, and unskilled workforce prevent the economic development.
- How to use the facilities for economic development of developing countries
– The amount of resources of the country
The larger a country geographically is and the more diverse its climate is, as well as the more active and employed the population per capita is, the faster the economic development process moves forward.
Some countries have abundant natural resources, such as oil, gas, and mines; in this regard, they have some development facilities, such as the currency, which is necessary for development of infrastructure and purchase of capital goods.
– Structure of economic activities
In terms of agriculture, industry and services are different in nature.
Whenever the economic structure changes from agriculture to industry and services, it does not mean that agriculture must disappear, but that agriculture with advanced technology will be more productive.
Thus, the faster a country changes its economic structure, the faster it goes through the stages of economic development.
– Political structure and historical background of the country
There are privileged groups that are united by common interests and have a direct and indirect impact on the society.
The dependencies of countries that once have been colonized by other countries slow down the process of economic development.
– Examination of innovation space in developing countries studies
The result of studies revealed the three factors affecting weaknesses of innovation at the developing countries:
1) Low level of training: it is important to eradicate illiteracy in the age of industrialization of countries.
2) Business Space: the business space is directly proportional to the development of innovation. The amount of competitive business space and bureaucratic arrangement systems, as well as the rules of entrepreneurs support the more suitable conditions for innovation.
3) Information infrastructure: communication infrastructure and information regarding to the early tools of innovation.
- The problems and stimulus of developing countries
The problems of the Third World countries to develop innovation contain three components:
a) Unequal exchange or inappropriate trade; in other words, the negative level of exchanges.
b) The terms of the governance and models of developing countries: some of them do not have the necessary efficiency.
c) Non-developed training in developing countries.
The solution of getting out of these problems is not the application of result of all results, but the application of them based on the level of development and culture of policies related to innovations.
Two important factors as the main stimuli influence the global drivers of evolution in these countries:
a) The intensification of globalization process and its impact on other realms increases the importance of trade within the global economy.
b) The extraordinary transformation of long distance communication reduced significantly the distance between countries and their time difference, connected the farthest areas to the world's most active areas.
Developing countries today have the well-founded prescriptive versions of the World Bank and the International Monetary Fund, such as liberalization, deregulation and privatization, and so on, which have limited effects on sustainable growth in the Third World; and the development of innovations and entering advanced industries can help these countries with technology innovations. Organizational innovations that have non-technological nature, innovation in marketing techniques, as well as innovation in processes and other innovations should be placed alongside with technological innovation to make it effectively developed or output.
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