Suppose the country, Burondo, is one of the poorest countries in the world. Its

Question

Suppose the country, Burondo, is one of the poorest countries in the world. Its economy is heavily reliant on income from the export of oil. There are only two oil extracting companies in Burondo. Both are owned by the government. A large part of the earnings from oil exports go toward financing the President’s lifestyle and entourage. Burondo has not had a single democratic election ever since it gained independence fifty years ago. Although Burondo is said to have abundant oil resources, only a small proportion is extracted every year because the extraction process is so inefficient. Transporting goods in and out of the country is costly, as Burondo is surrounded by lofty mountain ranges. The gross enrolment ratio in this country is very low and as a result, most of the adult population is illiterate. Life expectancy is also quite low. Agriculture is collectivized in Burondo and so, food shortages are common in the country. Using the information given, distinguish between the fundamental and proximate causes of prosperity (or its absence) in Burondo.

Explanation / Answer

If we look closely the case study, then we can say that Proximate causes of Burondo's lack of prosperity can be given as below:

Very low school enrollment due to poverty which also creates hurdle in the human capital development

Unskilled workforce which makes the country unattractive to the investors

Illiteracy of most of the adult population which does not support the development of technology and economy,

There are number of health issues resulted from food shortage

The country is still using old method of oil extraction making it uncompetitive in the world market.

Similarly, Fundamental causes of Burondo's lack of prosperity can be stated as below

No substantial incentive is given to farmers so that the agricultural production can be boosted.

The government is acting similar to an extractive political institution.

The country is having an adverse ecology or climate

the agricultural industry in the country can be characterized as collectivized

government is free to exercise its power due to no obstruct in the free rein of the government.

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