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a blog from young economists at Nova SBE

WHAT LESSONS CAN DEVELOPED COUNTRIES LEARN FROM DEVELOPING COUNTRIES?

Poverty is a broad and multifaceted concept, usually interpreted as the lack of minimal financial resources to obtain adequate food, clothing, shelter, medical care and to participate in society. It is not bound to the lack of material possessions or money but also includes several social, economic, cultural and political elements. Commonly associated with developing countries, with many people affected worldwide and severe consequences to the development of countries, poverty in developing countries has a multiple number of causes, and preexisting conditions – colonial era – have been hindering development and convergence to developed countries. The ineffectiveness of aid given to developing countries is one of the main drivers for poverty maintenance. Billions of US Dollars are received each year but its effective use remains an issue. Additionally, having a strong government that doesn’t hinder development, allowing for entrepreneurial initiatives and the good use of natural resources, for privatizations and foreign investment to come in, for multinationals to operate and for small businesses to access special credit conditions, discouraging child labor and improving educational systems by creating incentives for teachers and students to attend and succeed, and mainly keeping institutions functional and corruption-free, are also key factors to determine whether a country remains underdeveloped or takes off towards convergence.

However poverty is not limited to developing countries. Although in a lower scale, dealing with different issues and realities and frequently triggered by specific events instead of pre existing conditions, developed countries also face poverty and its multidimensional consequences: social exclusion, deprivation, homelessness, diseases, precarious labor, poor wages, nutrition and health care, lack of holidays or education for children, gender inequality, race discrimination, etc. But if the country is developed and has the means, why doesn’t it fix poverty? It raises a moral question about the kind of country we want to live in. The poor are frequently stigmatized and blamed for their poverty and what causes it, as if it’s a choice or failure, a matter of laziness or irresponsibility. And similarly to the increasing gap between developed and developing countries, the gap and divergence between rich and poor people also increases, not setting a good example for emerging economies that want to tackle underdevelopment and giving the idea that people are left alone, a damaging idea of society where no one wants to live.

It seems obvious that developing countries can learn from developed countries, but what about the other way round? According to the World Psychiatry Association, there’s a strong stigma associated to diseases and mental illnesses in developed countries. Improvements can be made regarding how people are treated, highlighting positive qualities of an individual and externalizing symptoms rather than internalizing them into their lives and social relations. A strong culture of family and community behavior in developing countries favors integration and belonging and could play a big role in overcoming exclusion, encouraging recoveries and improving treatment effects. How we treat our elder people is also determinant. Developing countries value veterans for their knowledge and wisdom – guides and consultants for several life aspects – rather than confining them to nursing facilities where they languish in poor conditions for the remaining of their lives. A lot of humanitarian work is also done in developing countries by people from developed countries, but with so many volunteers enrolling in overseas volunteer work and aid each year when there is so much to do internally, a better resource management to re-aim efforts would help to fight domestic poverty. Additionally, people in developing countries frequently live a simple life and this can teach some important lessons about the standards of affordability, saving, waste and what is essential, helping to redefine mentalities and concepts of poverty. Some developing countries’ remarkable struggle to overcome underdevelopment also matters: effective appliance of aid, small micro financed projects or foreign investment recipients that succeeded – some were already tested and would make a difference to those in need –, improvements in educational systems and school attendance, and eradicating corruption from governments and institutions. Equality in distribution of wealth is also an area of improvement for developed countries: the gap is high and increasing.

Knowledge used to be historically transferred from developed countries to developing countries. However, in the light of some growth stagnation in many developed countries versus increasing growth rates developing countries, and given some known successful examples of overcoming poverty in the developing world, either in effectiveness of policies or in positive mentality, there must certainly be something to be learnt the other way round.

FRANCISCO MIGUEL BARRETO SIMÕES

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Author: studentnovasbe

Master student in Nova Sbe

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