It is bad news for potential development when inequality soars in economies that are no longer expanding. The political backlash results in the emergence of populist politicians who promote remedies they claim would work like miracles. The effects are already apparent in wealthy nations, as evidenced by the escalating protectionist policies in the United States and the chaos caused by Brexit in the United Kingdom (Duflo and Esther). Even the International Monetary Fund, formerly a bulwark of the growth-first school of thought, now acknowledges that it is terrible policy to sacrifice the poor in order to advance economic progress. (Duflo and Esther) It now mandates that while offering guidance, its country teams take disparity into account. Even though economists have devoted their whole careers to researching poverty and development, the field still does not fully understand why some economies grow while others do not.
Standard of living signifies more than just consumption; although happier conditions are indeed partially about being able to ingest more, most individuals, even the very poor, are concerned about more than that. They want to maintain the health of their parents, educate their kids, feel valued, have their views heard, and be able to pursue their ambitions. While a greater GDP may assist the underprivileged in achieving many of these goals, it is simply one method of doing so, and it is not always the most effective (Duflo and Esther). In actuality, even in nations with comparable income levels, the quality of life differs significantly.
The underlying causes of long-term economic growth are still a mystery. However, there is a lot that can be done to eliminate the most egregious causes of waste in the economies of developing nations and of suffering among their populace. Without a doubt, things like children dying from diseases that could have been prevented, absent teachers in classrooms, and slow-moving legal systems reduce productivity and make life miserable. While solutions to these issues may not result in nations experiencing permanently higher growth, they could significantly raise the standard of living for their population.
Furthermore, while no one can predict when the growth locomotive will begin to move in a particular nation, when it does, the poor will be more likely to board if they are in good health, have access to literacy resources, and have the capacity to look beyond their immediate problems. It may not be a coincidence that many of the winners of globalization were communist nations that made significant philosophical investments in their citizens’ human capital or nations that adopted comparable policies because they felt intimidated by communism.
Consequently, the best course of action for a developing nation is to make an effort to raise living standards using the resources it already has by making investments in health care and education, enhancing the efficiency of the legal system and financial institutions, and constructing good roads and more livable cities. The same reasoning applies to officials in wealthy nations, who ought to make direct investments to raise living standards in underdeveloped countries. The most excellent way to radically alter millions of lives in the absence of a development miracle drug is to avoid making fruitless attempts to spur growth. It is to put a clear emphasis on the area that progress is meant to enhance: the well-being of the underprivileged.
Work Cited
Duflo, Abhijit Banerjee, And Esther. “How Poverty Ends: The Many Paths to Progress—and Why They Might Not Continue.” Foreign Affairs, 2022, Web.