Home >> Global Organizations >> World Bank and IMF  Email  Print Economic Development Kamala Sarup - 8/27/2007 There will always be an increase in absolute wealth, in varying amounts, by all countries because some wealth will inevitably spill over from the rich countries to the poor ones via trade, industrial globalization (the transfer of businesses from rich to poor countries) and repatriated income from nationals working in foreign lands. However, a perennial state of poverty in a nation leads inevitably to revolution, or emigration, or both, or to absorption by other countries.
The direct causes of income is tools, machines, materials, power sources, medicines, and manufacturing and commercial practices that are transformed into consumable goods and services comprising basic living standards that are summarized income statistics.
Good economic system affect living standards in three ways: They create goods and services that people want, but don't have. Automobiles, telephones, most medicines and medical care did not exist at one time, but were created by innovators. Good economic system improve the quality of goods and services that people already have.
Medicines, foods, clothing, medical care are improved compared to those available in former times. Economic development also increase the availability of goods and services to more people by reducing the effort, waste, and cost to produce them.
Food, clothing, housing, medicines and medical care became cheaper and, simultaneously, their quality improved since earlier times. Good economic development and associated incomes devoted to preventing people from killing and stealing from each other, i.e., judiciaries, prisons, police and military personal and institutions, restrict their being used to raise incomes and basic living standards, so however necessary they are in a world of aggression and acquisitiveness, they are counterproductive to raising incomes.
There are other ways to increase incomes, of course, but they are limited. We can put more people to work and compel them to work harder. They can extract more raw materials (ores, lumber, etc.), assuming they are available to exploit, but there are limits to how much can be obtained and used. We can put more land under cultivation, but that too is limited by people's appetites.
As an alternative, a poor country that wants to be richer must develop its own goods.
Therefore, if we produces more and better goods and services for its own people and for producing goods and services for trade with foreigners.
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