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Business in Underdeveloped Countries

Business in Underdeveloped Countries

There are several ideas that pop up into any person’s mind when they make a comparison between the developed and the developing nations. A few ideas that are perhaps more prominent could be limited resources, political instability, poor planning techniques and generally poor populations (Tajziehchi & Karbassi, 2015, p. 288). These are just a few of the hindering factors that have barred the developing countries from catching up with the industrialized nations. The developing nations could just be less fortunate to measure up to the standards. However, it is evident that these economies are doing less or nothing at all to rise up the ladder. Poor political structures and local monopoly are the major factors that derail the development of the underdeveloped countries.

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The countries trapped by underdevelopment hardly open up their markets globally (Skinner, 2015, p. 278). Ideally, local interest groups are much reluctant to opening up their markets internationally for the economies which have more advanced technologies. In the incidents where the domestic markets are open their borders for foreign firms, the nations hardly make any significant progress and remain trapped in the middle or low income levels. Even when the low economies attract FDI they end up being unsuccessful in the income ladder. A perfect example would be the case of Mexico when she assumed financial liberalization. The economy ended up even more struck as she accumulated high debts resulting to a crisis (Skinner, 2015, p. 280). This could be partially explained by the lack of control over capitals.blankPoor political institutions such as dictatorship hinder nations from developing. Under this political institution, the wealthy class take all from the working class leaving very little incentive to amass wealth and develop new technologies which could help to improve productivity (Tajziehchi & Karbassi, 2015, p. 288). Developing countries undergo longer periods of political instability compared to the developed nations. These trends put off potential investors as accumulating wealth in such contexts would be very risky.

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