Market In Typical Developing Countries example essay topic

The world has changed so much rapidly as economic activities have become not just increasingly internationalized but also increasingly globalized since the end of the Second World War. Between nation-states and countries the clear trend of the integration has extended all the key areas of modern life: the economic, political, legal, cultural, military and the ecological activities. But over time globalisation has been organized and institution ized in quite different ways, from the global empires of the nineteenth century to the present when world empires have given way to the 'freedoms' of the global market, laissez-faire economies, and multinational capital. For market approach economists who are widely labelled neo-classicalists, contemporary globalization proves a new epoch in human history in which market capitalism, following the collapse of state socialism in Eastern Europe and the Soviet Union has formed the only viable development path. This concept of globalisation reflects the emergence of a single global market and the principle of free trade, capital mobility, and global competition as the key elements of modernization and development. Pointing to the East Asian economic miracle and the Latin American experience of the 1990's, have been cited frequently as the successful development issues from openness to global capital and competitive forces and closer integration within the global economy.

Nevertheless this approach of development has never lacked of arguments. The memory of 1997-98 around Far East Asian may be still painfully fresh for many people. A financial disaster which caused millions people lost jobs and their families been destroyed in some extent has raised many doubts about the optimistic view of the neo-classicalists. Some economists believe that the market mechanism can never lead to the real development which widely accepted in academic circle and within the international community of development professionals as something close to the alleviation of poverty than to the mere achievement of aggregate economic growth, and that the latter would not necessary deliver the former. In order to explore a bit further a briefly mention here of the work of Adam Smith who is one of the founders of today's neo-classical economic theory is needed. In his famous work of the wealth of nation Smith asserts the importance of freely working market which indicates perfect competition and freedom of exchange in order to maximise the interests of all.

However in reality these market conditions are never perfect as there are so many forms of market failure one example would be the domination of a few firms always exists in some markets thus will attempt to prevent free competition. Therefore the government which is the primary regulator of its national economic system to create the legal framework must intervene in the market place. So the question need to be asked here could be: to what precise conditions which have to be satisfied for achieving maximum benefits for individual as well as society and how to explain, predict and control outcomes where the conditions are absent? Some economists argue that government should implement such policies as increased expenditure on education and training, subside for investment, direct public investment in the economy and grants or encourages for Research and Development, again very importantly to provide certain protection for domestic infant and potential-winner liking industries. Additionally, governments also hold the key role of balancing the whole economy during different period. In other words when the economy slumps into recession a government needs boost aggregate demand by promote demand-side policies such as increasing public expenditure, cut interest rate, etc.

On contrary reverse the policies to tackle the overheated economy. In 1930's, it is by the strong government intervention on expenditure that president Roosevelt was able to restore millions of unemployed Americans to a new hopeful life. Historically the state has either explicitly or implicitly played an extremely important role in the process of industrialization in all countries. It is impossible to see how those NICs could have achieved the unusual economic and export performance without the crucial input of government policies.

Take the example of South Korea, one of the poorest countries on the world in the 1950's, now is a member of OECD a 'Richs' club' dominated by those western industrial advanced countries. Its economy had been central directed resources on highly selective industries (mostly heavy and technology intensive ones) for the past 30 years. Indeed, all governments intervene to varying degrees in the operation of the market. On the other hand the neo-classicalists would put a statement like this: though, no markets are perfect but they will allocate resources more efficiently than alternative mechanisms.

These economists share the view that the slow progress made by some developing countries has been mainly accused excessive economic intervention by their own governments. The costs of this intervention have been typically much greater than its benefits in terms of both production and distribution. For instance the governments were not best placed to judge what type of training is needed by companies. Subsiding investment may hurt present consumption that is part of aggregate demand. As for 'picking winners', the governments has often through money into vain by picking the unsuccessful ones.

Nor has the quality of research in the universities give them a comparative advantage over the neighbouring countries. Overall it seems difficult to find a satisfied answer to conclude within this limited context here. However whichever approach just presented has been shown its standing point and explicit evidences can be drawn down from historical experiences to support all of them. Therefore I prefer to say it has to be depending on each individual case to decide which one really works as different countries at different period need adopt different policies. Most major economists have agreed that the structure of most developing countries is significant different from those industrialized countries to such an extent those economics outcomes in response to similar policies in each environment will systematically reflect such differences.

The market in 'typical' developing countries tends to be more imperfect and hence less socially efficient in allocating goods and services than more industrialized countries. The idea that governments will need to intervene in order to help, support, or 'stand in for' the market more substantially in developing than more developed societies follows the right direction to real development.

Bibliography

Alain, Anderton. (2000) Economics, Causeway Press, Lancs.
Adam, Smith. (1997) The Wealth of Nation, Oxford University Press, Oxford Christopher, C.
1993) States or Markets? Neo-liberalism and the development policy debate, Oxford University Press, New York.
Peter, Dicken. (1992) Global Shift, The Cromwell Press, Melksham.
Tim, Allen. and Alan, Thomas. (2000) Poverty and Development into the 21st Century, Oxford University Press, Oxford.