Class A2 Bong Ha Jin
Title: The reason of economic polarization and the solution of it.
These days, economic polarization is a big issue around the world. What is
this economic polarization which makes people so nervous? Economics defines
the economic polarization as the situation which two groups are located on
completely opposite sides. It means that there is an economic gap between rich
countries and poor countries. The gap can be observed if you compare the
situations of African countries and America. According to 'If The World were a
Town of 100 people' written by Ikeda Kayoko, about 60% of African children
are suffering from starvation. On the contrary, 35% of American children under
age 17, are seriously concerned about their obesity. The book also said that
if one american student skips a meal which costs about $6 and sends that money
to Africa, it can provide two starving children with food for a month and also
it's enough to pay for injecting vaccine and to cover the lack of vitamins.
Many Africans are losing their eyesight because they can not take enough
vitamins.
Then, what are the reasons of polarization in the economy? Here are four main
reasons that give rise to this polarization. The first reason would be
interference from advanced countries. Because developed countries are
concerned about newly industrializing countries, developed countries try to
prevent newly industrializing countries' economic growth. The second factor is
the unstable economical support of governments. As most developing countries
are suffering from political conflicts, from their viewpoints, the economy
would be the second issue.
Also, poor infrastructure would be another reason. Developing countries have
no infrastructure which is proper to lead economic growth. They have poor
transportation systems and lack monetary facilities.
The last reason would be an external factor. The saturation of the world
market prevents underdeveloped countries' economic advancement. Developed
countries produce a lot of goods which are high quality but the global market
is filled with those products. Therefore, developing countries with goods
which are low quality would be hard to compete with developed countries.
If these unbalanced economic situations last and developing countries can't
break through these situations, the economic gap would get wider and wider.
Eventually, underdeveloped countries would find that they are impossible to
reach the opposite side beyond the gap. After all, developing countries would
only be able to provide cheap labor and places where industrially advanced
countries items to sell. From now on, I'll discuss factors of polarization in
depth and suggest methods to break through this vicious cycle.
One of the main reasons for polarization is an interference of developed
countries. According to the book 'Kicking away the ladder' written by
economist Chang Ha Jun, developed countries kick away the ladder after they
reached the top. Thus, other following countries which also try to use the
same ladder fail to go upward. Also, advanced countries suggest 'good policy'
and 'good governance' to developing countries. In this case, 'good policy'
and 'good governance' are an attitude supporting a open economy and an
attitude following all the international laws such as the Accord on
Intellectual Property Rights and the Labor Relations Act. But Mr. Chang
emphasizes that the attitude of developed countries forcing underdeveloped
countries to follow 'good policy' and 'good governance' is completely a
paradox. He found out that developed countries had economic growth by
committing those things which now they want developing countries not to
commit.
Mr. Chang also blamed newly industrializing countries for taking advantage of
the 'not good policy' and the 'not good governance' until they reach the
complete advanced country. For example, when advanced countries were
developing countries, advanced countries protected their infant industries,
hired industrial spies, and plagiarize patents. However, if newly
industrializing countries reach the developed country, they start to support
an open economy system and strongly prohibit plagiarizing patents. As a
result, those stricter international rules make underdeveloped countries to
suffer more from the economic problem because they can't cut corners as
developed countries did.
The next reason would arise from unstable governments and social systems.
Since economic developments should be based on the government's strong
support, unstable governments in undeveloped countries can be an obstacle to
economic growth. In 'The Future of the World' written by Ikegami Akira who
tried to understand the world through statistics, there are thirty eight
million refugees in Afghanistan, five hundred thirty thousand in Iraq, four
hundred forty thousand in Somalia, and three hundred fifty thousand in
Vietnam. The enormously large number of refugees show us obviously that
societies of underdeveloped countries are chaotic. It's almost impossible to
lead a fine industry from chaos.
To make situations more miserable, those countries swarm with terrorists.
According to 'The Future of the World', except for only Morocco, all of the
African countries have terrorists. People who possess most of the nation
prosperity are supporting the terrorists instead of the national economy. As a
result, the power of the terrorists is getting stronger and developing
countries proclaim default. Most of the public revenue is spent buying arms.
Also, the social system such as a low literacy rate makes the problem worse.
Governments of underdeveloped countries can not afford to educate people.
According to 'the future of the world', except for South Africa and Cameroon,
all of the African nations have a low literacy rate and most nations can't
even do a survey because of such a low literacy rate. From this fact, we can
find out that without solving problems which I dealt above, the economic
growth in developing countries would be fundamentally impossible. Factories
can not be run by illiterate people. In this state, it is natural for
government to focus on reforming the society rather than raising the economy.
Governments of developing countries should reform the social system and solve
the fundamental problem. As a result, the economic problems must be the second
issue.
The third factor of the economic polarization is the poor social
infrastructure. First of all, developing countries have no financial
foundation. According to the book of Ikegami Akira,'the future of the world',
most of the developing countries are Heavily Indebted Poor Countries (HIPC).
They can't afford to pay back national debt. Most of the public revenue is
evaporated by tax dodging and power holders. Since public revenue is
overwhelmed by national debt, developing countries can't escape the economic
vicious cycle.
Also, one of the most important social infrastructures for economic
developments is transportation and storage system. However, developing
countries are lacking in those infrastructures. For example, Indonesia can not
afford to lay highways and can't even lay paved roads. There is no one who
knows how to lay highways. Also, according to information from the
webpage 'http://blog.naver.com/qofjrak92/140016856923', geographical features
of Indonesia, where the ration of forest takes about 60% out of the whole land
because of a tropical climate, find it impossible to construct roads. If they
want to lay the road, they need to cut down all of the trees on the way. The
construction would cost a lot and probably have to destroy huge amounts of
land although the lands are very important since the economy of developing
countries is mainly based on agriculture.
Last but not least, a saturated global market centered on developed countries
creates polarization. If developing countries want to be advanced, they
should succeed in world market. Although they have two ways to succeed, they
have difficulty in using those methods. The first method is winning
competition in quality. These days, people tend to seek things that have good
quality although it's very expensive. Advanced countries use a lot of methods
to meet those demands. They use delicate computer programs and precise
machines to produce goods. On the contrary, developing countries have to work
through the whole night to make one fine product. They have no factory or
machine tools. Even if they have machines, there are few skilled hands to
operate a factory. Most of the skilled labor went to developed countries to
find better working conditions and better salaries.
Also, if you look at the total output, underdeveloped countries can hardly win
with developed countries. Let me give an example with agriculture. The way of
developed countries' cultivation is very scientific. For example, developed
countries use an improved seed (which is called miracle rice). However,
African countries cultivate in devastated areas because they don't know how to
use fertilizer and can't afford to buy it. In a same size of area, developed
countries such as America and Australia can harvest about three times as much
as underdeveloped countries can. As a result, underdeveloped countries are not
able to produce competitive goods. Thus, they don't have any source of
foreign currency.
If the vicious economic cycle of underdeveloped countries keeps going on, soon
the world would be completely divided into two. To prevent this tragedy, we
need a constant effort.
Developing countries have a lot of good samples which can be very useful for
their economic growth. They can take only good economic policy and reduce the
chance of economical mistakes. However, developing countries must consider
their own conditions when they introduce the economy policies of developed
countries. Developing countries should be able to transform the developed
countries' policies into their own styles because even though the policy is
very good, sometimes it can be hard to introduce.
Moreover, developing countries should make every effort to lift their economic
condition. One of the efforts is the AU (African Union) and the ASEAN
(Association of Southeast Asian Nations). The EU is a role model of the AU.
The AU tries to follow the example of the EU. Both EU and ASEAN are planning
to set up an associated assembly and a central bank. Also, they are
considering a currency reform. According to Agence France-presse, ASEAN is
aiming at economical and political cooperations among southeast asian nations.
Ten nations already joined and many other countries are preparing to join.
However, most of the southeast asian nations are competing against each other.
So, economical cooperation is very rare. This fact that there are rare
economical cooperations between developing countries is also one of the
problems that developing countries should solve. They should know that the
perfect cooperation can be an enormous energy to boost up their economic
situations.
For underdeveloped countries, solving their economic problems might not be
easy. However, Where there's a will, there's a way. If developing countries
start to solve from the fundamental problems carefully and fully use given
examples, someday they will break through the vicious cycle.
Works Cited
Books
✔Chang Ha-joon. "Kiking away the ladder". Anthem Press (The Korean version-Bookie Press), 2002
✔Ikegami Akira. "The future of the world"(세계는 지금 어디로 가고 있나). Kodansa
Ltd. (The Korean version-Jong Moon Press), 2002
✔Ikeda Kayoko. "If the world is a town of 100 people" (세계가 만일 100명의 마을이라면). Gook Ill Media, 2001
Internet Resources
-Newspaper article on the internet
✔"ASEAN Sets Up Development Fund to Bridge Economic Gap Between Members."AFP(Agence France-presse) 26 July. 2005
✔"New report highlights economic gap" RTE(Radio Telefis Eireann) news 24 July. 2001
✔"중산층 급속붕괴, 貧·富 양극화- The rapid desolation of the middle class, economic polarization" 조선일보-Chosun daily 21 Dec. 2004
-Professional articles on the internet
✔Omar, Kaleem. "The economic gap between rich and poor nations is widening even further." jang.com. 09 February 2003. Business & Finance Review
✔"BLACK PROGRESS: TWO WAYS TO LOOK AT IT" KeepMedia BusinessWeek 14 July. 2003
✔이윤규-Lee Yoon Gyue "빈부양극화 해소방안-The solution of the economical gap"
Personal research paper. 15 March. 2006
✔김승용-Kim Seung Yong “인도네시아 소개-About Indonesia"
Naver.com personal website.