Poverty In Less Developed Countries
...ll as the rich countries, practice different forms of trade protectionism. “In fact, the protectionism of the poor and the rich countries must be viewed together symbiotically to ensure effective exports by the poor countries. Thus, even if the doors to the markets of the rich countries were fully open to imports, the exports from the poor countries would have to get past their own doors”. (Trading for Development Poor Countries Caveat pg. 4) These policies need to be revised in such ways that will benefit both. The products of less developing countries, in this particular condition, need to be given priority by the consumers, over others exporting countries who are doing reasonably well since their situation (the situation of LDCs) is more urgent. That advantages that LDCs which possess natural resources have is the high demand for their resources. These particular countries that have natural resources would recover from poverty much faster than those who have poor resources. Exporting their natural resources will give them a head start. It will drastically increase the countries’ revenue. These revenues will provide a lot of opportunities such us the ability to import some highly developed technology from rich countries. It will create efficiency to their market productivity and eventually contribute greater efficiency and rapid productivity and in the end they will free themselves from the state of dependency. The combination of trade, foreign direct investment, and remittances will play a big role for long term alleviation of poverty. The remittance can play a big role for changing people’s life for immediate financial need. The remittance can be seen as what the article calls “crucial self insurance” for less developed countries. Even if the invisibility is limited within the larger picture but for the short term it becomes more effective, combined all together, than any aid or trade. Thus the Inter-American Development Bank’s Multilateral Investment Fund, shows remittances to Latin American to be $32 billion in 2002 and total remittances to developing countries at $103 billion, which is substantially greater than those reported by the World Bank ($25 billion and $80 billion respectively?). (Remittance the New development Mantra p4)? Remittances are another important financial resource that many developing countries highly depend on. It is becoming a means of survival. The idea of this remittance is short-term income relief. It does not substitute the long-term solution to the issue of poverty but it does turn the life of people around. When countries experience civil war or economic crisis people living in the country of their origin go to more economically stable countries to help both themselves and those they left behind. For many third world countries that are impoverished by civil war, remittances have become a means of survival.7 “Remittances play a critical insurance role – and this has significant impact on both poverty and equity. For people in “failed states” remittances are critical for personal consumption. In Haiti, remittances were about 17 percent of GDP. In Somalia following the collapse of a formal government in the early 1990s, remittances from the Somali Diasporas based in the Gulf States, several European countries, the US and Canada became a critical survival resource for many Somali families. In particular, remittances helped many urban families cope during the harsh years of the 1990s. By the end of the decade with remittances between 25 and 40 percent of GDP (all figures are very approximate), in some pockets, such as southern Somalia, these resources began to be invested in construction and commerce” (Remittance page 15). The less developing countries that don’t have rich resources and have agriculture commodities, many time their commodities does not turn quick to cash the same way as those natural resources. This is one of the common disadvantages that less developing countries experience comparing to those with the rich natural resources. Most of these countries had been unfavorable and deteriorating as the result of these products. The primary products they bring to the market do not get a fair market. Or some time they produce more and the demand is too low. The combination of all these factors brought much instability to these particular countries. Furthermore, it is clearly underscored by the importance of commodities they export. It is the combination of all these that less developing countries are suffering from. Their situation never seems improved. One way of alleviating their situation it needs to develop organization that over see the demand and supply for their commodities or the governing bodies that control quota for each member of the less developing countries. It is through these governing bodies that the price of their commodities adjusted. Some time the countries produce will be more than the demand these commodities will drop or vise versa. Once the organization oversees the price their commodities become stable and it will not fluctuate up down. The governing body will also challenge some these countries that produce quality products. If it has a poor quality product their product can be rejected. Here is where the aid would play the important role to improve some their infrastructure in ways they bring more quality products. The board member has to have some mechanisms where they reassure the quality product in order that those products go through to the market. The aid should focus on production improvement; such as importing highly developed technology that will increase good quality production. Including improving reliable transportation and developing good communication so they can have updated information about their commodities which most of these less developing countries lack. “There are 11 African landlocked LDCs where such imports are equivalent to over 20% of total exports of goods and services. In this situation, the growth process in those countries is very vulnerable to disruptions in the transit transport system” (UNCTAD 2004 table28p112) 8 It is one of the major problems that set them back from the competitiveness in the international trade. “Agriculture products are collected often by traders from many different producers to achieve some economies of scale. The level of inefficiencies in commodities processing also appears to rather high and has serious implication for costs there by robbing the less developing countries of its competitive advantage in producing commodities”(page16). The aid has to be invested heavily on this area for bringing the quality product. This is one ways of increasing both their quality and high productions. In the end these countries they will depend on themselves rather than the outside of aid.9 In addition, the aid should be invested in technical human resource. The human technical resource is the key for competitiveness of agriculture commodity product development. “The competitiveness of agriculture commodities product is highly dependent on the availability of human resources and managerial expertise.10 _________________________ 8 Finally, landlocked LDCs have a specific type of import sensitivity which is related to the fact that their international trade is often quite dependent on imported transport and insurance services. There are 11 African landlocked LDCs where such imports are equivalent to over 20 per cent of total exports of goods and services. In this situation, the growth process in those countries is very vulnerable to disruptions in the transit transport system (table 28). 9 The existence of small scale production units in most African countries lead to poor quality of products. This also affects products competitiveness. Agricultural products are collected often by traders from many different producers to achieve some economies of scale. The level of inefficiencies in commodities processing also appears to be rather high and has serious implications for costs thereby robbing Africa of its competitive advantage in producing commodities like cocoa, tea and coffee vis-à-vis the new and more efficient producers in Asia and Latin America. 10 The competitiveness of agricultural commodity products is highly dependent on the availability of human resources and managerial expertise. Lack of education and training is very often responsible for the poor performance and low productivity in agriculture with its resultant effect on commodity market stability. A related but sorer problem is the exhibition of lack of trust often shown by inspecting teams from developed importing countries in the quality and monitoring function of hygienic standards done by government inspectors in agro-processing plants from the developing countries. Luck of education and training is very often responsible for the poor performance and low productivity in agriculture with its resultant effect on commodity market stability (page17) this is the second area where the aid should be spent. The human technical resources are a key for bringing the quality and efficiency product. It is the only way for them to stay in competition to improve their condition. After discussing the process of the quality improvement is the final stage to develop the multiple market strategies. It is one of the major problems that many of these countries are suffering from. Many of the production facilities are often small and unable to take advantage of the economies of scale within the countries. Because of this, some of the products are unnecessarily exported form the outside. One of the problems is that the infrastructure is so poor it cannot fulfill the demand of the internal market. Once again, the aid can be invested into a way they to develop many small-scale producers. The governments should play a role to encourage an entrepreneurship sprit. Because they are the mains engine for development this type of the market. In addition to aid, some of the remittance can also play big role for these type of home market development. The regional market is another one of the most important market some of the LDC countries are not utilizing. Any country that brings their market to the regions will be second ways creating more demand for their commodities. For example, if the price of the commodities fall this country will redirect to different channel of market. This is one of advantages of having multiple markets. In addition, the idea of learning how to deal with multiple market would force the countries to improve the commodities both the qualities and productions because each market demands different qualities. The third idea is it will also decrease the conflicts in regions. Reducing the civil conflict and encourages peace and prosperities. In the end, it would be the elimination of the poverty. International free trade can make a major contribution to reducing global poverty. It is up to the policymakers in both the industrial and developing countries to ensure the less developing countries to export their commodities to the highly develop countries. There are two factors that need to be addressed, the quality products of the advanced countries demand from less developing countries and the trade policy that goes along with it does not leave much room for this countries. Because of these two reasons it is hard for less developing countries to export some of t...