The United States is considered to be an industrialized nation because we have s

Question

The United States is considered to be an industrialized nation because we have such a high standard of living. Countries with lower standards of living are considered to be emerging or developing nations. What factors prevent developing countries from becoming developed? Why? What are the responsibilities of industrialized nations to developing nations in this regard? Why? What are the responsibilities of businesses in industrialized nations to businesses in developing nations? Are there any? Why? Why not?

Explanation / Answer

Each developing country is different and has different cause for their lower standard of living. China, for example, is the most industrialized nation on earth, yet their middle class is only now beginning to emerge. The Chinese government is the ultimate share-holder, that is owner, of the chinese based companies. Yet, since China has a communist government, the state is by definition the "labor union" of the people. Any other organized labor groups are illegal, and staging a strike could lead to severe punishments for the perpetrators. So you end up with a fascist system masquerading as a socialist system (not much different from the "National Socialism" in 1930's Germany). Since the workers don't have any real negotiating power and there are so many workers available, their pay is just barely enough to sustain themselves. Adjusted for their local cost of living, managers at Chinese firms tend to draw salaries comparable to their North American and European counterparts, and this "management class" is the seed of China's emerging middle class. Until China builds a reputation for developing innovative products, like Japan, or can manufacture certain goods with super quality over their Western competitors, China will only be considered a source of cheap labor. This means that Chinese wages cannot increase beyond the difference between equivalent Western wages and the cost of transportation (which is substantial). The cost of transportation is tied to the price of oil, which over the long term will continue to increase, which could be a long term risk to China's competitiveness.

For many developing African nations, industrialization can best be described as still-born. Most of the continent was under European colonization, but with the focus on extracting their resources rather than resettlement by European families, with South Africa being the notable exception and the dominant economy south of the Sahara. The push for independence came shortly after the Second World War and at first things looked promising, but nation after nation fell into chaos and civil war. Even though the European colonists were robbing the people of their resources, the people were dependent on the stability and infrastructure they provided. The Europeans tended to favor one tribe over another during the colonial days, and the resentment and unsettled scores continue to this day, such as the violence between the Hutus and Tutsis in Rwanda. Africa is the most abundant source of raw materials on the planet and by such measure should be the wealthiest continent, but this is not the case. The colonial governments extracted their resources for over a century, and now today many African governments are selling their resources to Western corporations, such as oil companies in Nigeria. These companies bring with them their own workers from Europe and America, so there are limited jobs for the benefit of the local population. Many of the African governments are corrupt, unstable, and constantly enticed to make deals with Western corporations to extract minerals and other resources. Most of the nations are deep in debt and need whatever cash they can get, but very little gets to the people. The abundance of gold and diamonds means that once a conflict gets started there is no shortage of weapons, so peace has been a constant struggle since war tends to be more profitable (google Blood Diamonds). There are some signs that the continent is beginning to stabilize and manufacturing is on the rise. The economy may blossom similar to East Asia during the 80's and 90's. Check the tag on your clothes - you may be surprised to see how many are made in Africa.

India is a land of contrast and blatant inequality, largely due to the caste system dating back to centuries. They are now a nuclear power yet millions of peasants live in abject poverty (google Slum Dog).

Many Central and South American countries have a long history of government corruption, which can smother any economy, but this part of the world is developing at a fast pace and is becoming a real contender with North America and Europe.

Russia and Eastern Europe are developing rapidly today, but these nations took decades to recover from the devastation of WWII. The restrictive communist governments were isolated and could not benefit from the free trade between the Western nations. Soviet military spending depleted funds that could have been better spent on post-war reconstruction. After the fall of communism, and subsequently the Ruble currency, the Russian Mafia emerged to fill the power and economic vacuum. The mafia and corruption was everywhere in the highest and lowest places, which made for an inhospitable environment for Western businesses that tried to invest in the early days of Russian democracy.

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