LESSON 4

PROBLEMS AND DEVELOPMENT STRATEGIES

TOPICS
1. Problems of The Third World Countries
2. Agricultural Development
3. Industrialization and The Third World Countries
4. Rural and Urban Development

LEARNING OUTCOMES
At the end of the lesson, you should be able to:
1. Identify problems of less developed countries.
2. Enumerate barriers of development and identify its economic
measures.
3. Compare agricultural development in poor and rich countries.
4. Identify contributions of agriculture in economic development.
5. Recognize importance of industrialization and its implications to
the third world countries.

TOPIC 1: PROBLEMS OF THE THIRD WORLD COUNTRIES

Third world countries refer to the less developed countries or developing countries. These are
the nations emerged from their colonial periods. There are still under the control or influence of
their former colonial administrators.

Most of the poorest countries are located in Africa, Asia and Latin America. Evidently, the gap
between the rich and the poor nations are very wide - and it is getting wider. Example is the per
capita income of top one (1) for the year 2019 Luxembourg with more or less $113,000 with the
per capita income of the Philippines with more or less $3,000.

Characteristics of Third World Countries

Developing countries may differ in their religious, cultural, social or political institutions. The
religious belief of Thailand and Philippines or the government structure of Malaysia and Africa.
Nevertheless, such countries have common characteristics as the root causes of their poverty.

The human factor or the people is still the key to the success of any development endeavor.
Money and natural resources become useful and productive if they are not properly utilized by
the people.
 Subsistence
Agricultural
Economy
High Rate of
Low Per Capita
Unemploymen
Income
t

Inefficient Characteristics of the

Public Less Developed High Birth Rate
Administration Countries

Negative
Attitudes,
High Illiteracy
Values and
Institutions
Poor Health

THE PROBLEMS OF LESS DEVELOPED COUNTRIES

The basic problem of most societies is not only scarcity of resources but also the proper allocation
and utilization of such resources.

The unjust distribution of wealth and income among the less developed countries had been
considered as the root cause of poverty. And poverty has many adverse implications and linkages.

Most of the poor people:

▪ cannot buy most of his basic needs
▪ becomes undernourished and unschooled
▪ no savings
▪ no opportunity to invest
▪ his miserable conditions can likely create social and economic problems

Most people in the developing countries are trapped in the vicious circle of poverty.

MALTHUSIAN THEORY
VICIOUS CIRCLE OF POVERTY
LOW
INVESTMENT LOW
EMPLOYMENT

LOW SAVINGS
LOW
PRODUCTION
LOW INCOME

Thomas Robert Malthus an English classical

economist, authored Essay on the Principle of Population 1798. The Malthusian theory states that
unchecked breeding of men causes population to grow by geometric progression whereas food
supply cannot grow rapidly or more than in an arithmetical ratio.
 TOPIC 2: AGRICULTURAL DEVELOPMENT

Food shortage are widespread in the less developed countries, particularly in Asia, Africa, and
Latin America. The present population of the world is around 7.5 billion according to the current
US Census Bureau as of June 2019. Experts claim that the resources of the earth have the capacity
to feed a population several times bigger than the
present one.
The technical efficiency is not the root cause of low
agricultural poverty in the Third World countries.
There are pervasive institutional defects in
agriculture that greatly contribute to the inefficiency
of the farmers.

One of the first true agricultural villages was discovered in the hill of Iraq. This village is now called
Jarmo. From Jarmo, the knowledge and practice of agriculture spread out to other parts of the
Middle East, then to Asia, Europe, and the rest of the world. The early developments of
agriculture did not only create stable societies but also economic, social, political, cultural, and
religious Institutions. However, there are few agricultural villagers have not yet graduated from
their primitive societies.

Agriculture compared with other major economic activities have many disadvantages. Like the
climate or mother nature is beyond our control. But despite of the problems involved in
agricultures there are specific contributions of agriculture that each nation should nurture for
their advantage.

Agricultural Uncertainties
▪ natural calamities can easily destroy agricultural investments.
▪ inputs of farming are expensive (fertilizer, chemicals, tools, machines)
▪ need more funds for the necessary inputs
▪ prices of farm products are not stable
Contributions of Agriculture
▪ Modern agriculture supplies raw materials to the industrial sector and foodstuffs
to the urban population.
▪ With higher agricultural productivity, people in the agricultural sector get higher
incomes. Such favorable condition attracts more investments in the industrial
sector. As a result, more employment, production, and income are generated.
This, further raises consumption level, and so with investment.
▪ When agriculture supplies efficiently modern machines and technology, it is
capable of releasing a portion of its labor force for employment in industrial
sector, and in commercial enterprises. This is the trend in the industrial countries.
In Japan, there has been a great exodus of people from the rural areas to the
cities.
▪ An agricultural economy earns more foreign exchange like dollars by exporting
more agricultural products. This is made possible if agricultural production
increases or when productivity improves. A less developed country is always in
great need of foreign exchange for importing machines for its development
programs.
▪ In improving the economic performance of agriculture more jobs are created. This
reduces the economic and social problems in the rural areas which are
widespread. Such improved situation diminishes the movement of rural folks to
 the cities. Thus, urban problems like slums, traffic congestions, unemployment,
and squalor are not further aggravated
▪ A sustained agricultural development provides a more balanced economic
development once a country has attained full industrialization. The United States
is a highly industrialized economy but it has not neglected its Agriculture. It has
pampered the farmers with incentives so that they will not leave their farms.
Possibilities for Agricultural Development
▪ Schumacher, a British economist, proposed intermediate technology, a type of
technology which is between the modern technology and primitive technology.
This is more appropriate because it is less expensive and simpler than western
technology but more efficient than primitive technology.

A significant cause of the food crisis in the developing countries has been the tremendous
population growth after the World War II. From then till now millions are hungry and millions of
starved and malnourished people, especially children, die every year.

Food production scientists have discovered that we have not yet reached the limits of out
agricultural production. There is still a room for increasing output through more efficient
utilization of the farm resources (Shroeder, 1983).

Farmers’ Organizations
A good organization combines the resources of its members (money, skills, talents, tools, and
materials) in order to be able to maximize the benefits for its members. With the cooperative
efforts of the members, any organization can become strong and powerful. It is strength if it is
led into the right direction that can promote the welfare and interest of the members. The world
has many stories about successful organizations of poor workers. Unfortunately, in the less
developed countries, farmers’ organizations are very few and very weak. These are easily busted
or exploited by the powerful landlords. And even some governments discourage the formation
of farmers’ organization.

Poverty has been deeply rooted in the rural areas where millions of landless peasants work and
live. Their hunger and exploitations could have been prevented if only their governments have
encouraged and assisted them in building up their organizations. On the contrary, which is most
lamentable, not a few less developed countries even persecute leaders of the poor farmers. They
are often branded as communists or subversives. And yet they have done nothing, except to fight
for the rights of the oppressed peasants.
Global MPI 2018 Report

https://www.insightsonindia.com/2019/03/27/global-mpi-2018/
The report, covering 105 countries, dedicates a chapter to India because of this remarkable
progress. However, India still had 364 million poor in 2015-16, the largest for any country,
although it is down from 635 million in 2005-06.

Reforms in values and institutions

There are important factors that contributes to the success of agricultural development to solve
the food shortages in the developing countries. These are agrarian reform, cooperatives, farmers’
associations, credit, values and health of the farmers.

Evidently, agricultural development is not purely an agricultural affair. It requires appropriate

changes in attitudes, values and institutions which directly affect agriculture. Agriculture involves
interdependent variables, the proper use of these can solve the problems of food shortages.

The Green Revolution

The Green Revolution is a product of the US capitalist
system. Eleven research stations were established all over the
world to promote cash crops, such as rice, corn, wheat and
sorghum. Among these research stations is the
International Rice Research Institute in U.P. Los Baños. Its job is
to create “miracle seeds.”

Such research stations are being funded by Rockefeller and Ford Foundations, World Bank, U.S.
government, and U.S. businesses. Dr. Ernest Feder, United Nations consultant on agriculture said
that the Green Revolution is actually an instrument of U.S. capitalist expansion. The various seeds
developed by the research insecticide, the herbicide. All these are sold by the United States. If
lesser quantities of the said inputs are applied, harvest fall.
 TOPIC 3: INDUSTRIALIZATION AND THE THIRD WORLD COUNTRIES

Industrialized countries like United States, Japan and Germany have become an inspiration for
the developing countries. The wonderful and modern things industrialized countries have been
created have realized try to the developing countries their big differences. Thus, their impression
of an industrialized economy has further improved.

Henceforth, there has been a strong clamor among many of the Third World countries for
industrialization. They believed that they can eliminate poverty, insecurity, and overpopulation
through industrialization.

However, industrialization of less developed countries is not an easy task. There are many
obstacles which includes, capital, modern technology, competent management, and skilled
labor. But in spite of these, industrial development is not completely impossible for the economy
of less developed countries.

Starting the Process of Modern Growth

Industrialization among the developed countries did not happen overnight. Prior to their
industrialization, they experienced changes such as:
▪ Economic, social, and political institutions were restructured to pave the way towards
industrialization.
▪ There was a rapid technological industrialization.
▪ Factors of production were made to be more responsive to industrialization.
▪ Substantial improvement in transportation, communication and electrification were
undertaken.
▪ Social facilities and services were increased.
▪ Agricultural and commercial industries became viable.

The aforementioned developments were greatly responsible in the industrialization of the highly
developed countries. Clearly their economic growths did not go through a quick and easy process.
They laid down the foundation of their industrial development. Such experiences of the industrial
countries should provide a lesson to less developed countries that are aiming for rapid
industrialization.

The English Experience

England during the middle ages had a pastoral economy. Its
agriculture was basically primitive. Europe at that time was
mainly under a feudal and manorial system. England was
the first to industrialize its economy. More favorable
circumstances made England to lead in industrial
development. It was able to eliminate feudalism, and
established a central government earlier than countries in
Continental Europe. There was a comparative political stability
due to its geographical positions. England developed a larger
and stronger middle class than other European countries.
Mercantilism started in England, and later on the Industrial
Revolution developed in the late 1700’s.
Inventions and Innovations which were appropriate to local
conditions gradually developed. The development of better
techniques of production through machines and division of labor
tremendously increased the rate of production. Under a laissez
faire environment, capitalism expanded. This stimulated the
growth of the factory system. Thus, England has achieved an
industrial growth. The benefits of Industrial Revolution did not
remain in England. Other countries in Europe, then the United States started to industrialized
their economies.

However, the economic success of England was not without

blemishes. Factory workers were exploited. Even the children and
the aged had to work hard in factories in order to survive the
ravages of poverty inflicted by unscrupulous capitalists. Such abuses
were bitterly opposed by Karl Marx, Robert Owen and other
social reformers. Evidently, the early industrial growth of
England was at the expense of the workers and their colonies.

Developing the Foundation of Industrialization

Most people in the less developed countries live and work in

the rural areas where agriculture is the principal source of
income. Obviously, improving agriculture and its institutions is
also improving the welfare of the people. This means there are
more jobs and income in the agricultural sector. As a result,
consumption of goods and services increases and further stimulates investments and production.

Agriculture can serve as a strong foundation of industrialization. Agricultural products must need
to developed first to provide raw materials, food, labor, and market to industries. With this,
agricultural development and industrialization are interdependent. Agricultural growth cannot
go very far without the help of industrialization and vise versa. Industrial countries like the United
States, Japan and those in Europe started their economic development with a strong agricultural
base.

REASONS FOR Based from the book Industrial Development by

INDUSTRIALIZATION Murray Bryce, the maximum benefits can only be
acquired if the individual industrial projects are
To increase the national income economically sound, feasible, and appropriate to local
of the country. conditions. Many government projects have been
inspired by a political leader who has no training in
industrial economics. Although such projects were
To improve the stability of export made in good faith, the error entails a high price for a
earnings and national income. poor country. Mistakes was a great waste of scarce
resources.
To provide more employment to Industrialization is a gradual and systematic process.
the unemployed and
This system can only perform effectively if there is a
underemployed.
progression from the small to the large, from the
simple to the complex. There is a fundamental principle
To expand markets of local raw in community development that applies to industrial
materials. projects. It states that in putting up a community
projects, always begin with a simple project which is a
felt need of the community. The idea is to minimize the
possibility of failure and frustration. Clearly, the
probability of success in implementing a simple
project is greater than that of a big and complex
project.

Criteria for Sound Industrial Projects

A good industrial for developing countries should be able to meet the following criteria:
Economically sound and feasible or it should not be a waste of scarce capital, skills
and time;

Stresses labor-intensive industries in order to reduce the widespread unemployment,

underemployment, and disguised unemployment;

Its benefits seep down to the level of the masses;

Easily makes profit for the investors and the national economy;

There is a ready market, either at home or abroad, for the goods it intends to
produce; and

It fits into the total economic development program of the country.

Encourage Foreign Investments

A most likely alternative for less developed countries is to encourage foreign investments.
Singapore became prosperous because of foreign investments. This also happens in Hongkong.
However, in the experiences of many less developed countries, foreign investments have only
improved the economic conditions of the multinational corporations and their local
representatives.

Foreign investment should be a stepping stone for industrial development. It should not be
substitute for local private initiative and entrepreneurship. It should not compete with local
investment. There are many areas of investment in which both foreign investor and the less
developed country could gain mutual benefits. Precisely, these should be developed, and not
those which hamper the economic interests of the local industrialists.

Barriers to Industrialization
South Asian leaders have been aware of the economic success of highly developed countries due
to their industrialized economies. Hence, the aspiration for industrialization has not been
forgotten.

Professor Gunnar Myrdal gave his observations on the region’s dream of industrialization:
▪ There is an unskilled labor force and a small inexperienced managerial resource.
▪ Rapid industrialization will not generate sufficient employment. It may even be negative
if modern industry will compete with traditional labor-intensive manufacturing.
▪ There is inadequate logistic support such as power, transport and communication
facilities. Also, not all raw materials for industrialization are locally available.
▪ Existing social, economic, cultural, and political institutions are not favorable to
development.
▪ Attitudes and values are likewise not suitable to industrialization.
Nevertheless, Myrdal did not discourage South Asian countries in their industrialization drive. He
proposed that such economic pursuit should be complemented with mass education and public
health programs. In addition, he suggested that the bid for industrialization should be supported
by the development of other fields of the economy. Myrdal stated that vigorous policy measures
should be aimed towards improving labor utilization and productivity in other sectors, especially
agriculture which is the largest and most important sector in a less developed economy.

Philippine Industrialization
The goal of the Philippine economy has been increased the share of manufacturing in the GNP.
Like other developing countries, the Philippines has been aspiring for industrialization. Since
1916, there were experimentation with policies which were envisioned to promote
manufacturing in the Philippines, and the promotion of entrepreneurial ventures among local
businessmen. Professor Frank Golay of Cornell University stated that the Philippine
industrialization policy included (Golay, 1961):
▪ Direct participation of the State in manufacturing and industrial activities as an
entrepreneur or partner of private firms.
▪ Development of financial institutions for allocating scarce credit and foreign exchange
resources.
▪ Provision of government incentive to private entrepreneurs.
▪ Promotion of selected foreign investments in manufacturing.

In early 1950’s, the government owned and managed railroads, hotels, electric power, gas and
water works. It directly produced coal, cement, steel, textiles, pulp and paper. In 1953, there was
a radical change in industrial policy. The government initiated the policy of selling government
companies in which the private sector was interested and those companies which were
inefficient.

Philippine industrialization rose rapidly since 1950 in terms of growth, number of firms, and
number of plants or extent of Filipino participation. In 1950, the value added in manufacturing
was only 8.5% of the national income compared with 42.3% in agriculture. Eight years later, the
contribution of manufacturing to national income increased almost three times. During this
period many infant industries were heavily subsidized by the government. They were granted tax
exemption and foreign exchange allocations. They were also protected from foreign competition.

The Social Cost of Industrialization

Industrialization spawns more investments, employment, production, and income. In the
process, more buildings, factories and machines are being created in response to an increasing
demand for goods and services. Likewise, industrialization serves as a magnet to people in the
rural areas. They go to the cities to look for a job or for business reasons. This increases faster
the urban population. Hence, housing, health, education, transportation, communication and
other social facilities and services have to be expanded to serve the growing human needs.

Not a few Third World countries which have two or three industrial cities have been afflicted with
numerous social problems. The uncontrolled massive influx of rural people has caused various
economic and social dislocation in the cities. Evidently, the less developed countries cannot
provide even the most basic social services to the poor. Thus, slums grow like mushrooms – just
behind the tall modern buildings in urban communities. The presence of absolute poverty in a
rich industrial society breeds crime and many forms of immorality.
TOPIC 4: RURAL AND URBAN DEVELOPMENT

To test the real strength of any nation, its weakest sector

should be measured. The latter usually refers to the
countryside or rural areas. If the rural folks are contented and
their basic needs are properly satisfied, then such nation has
good economic and social conditions.

Urban refers to a human settlement where the rate of

urbanization and industrialization is high. While, rural refers to settlement where the rate of
urbanization is quite low.

Comparison Chart
BASIS FOR
URBAN RURAL
COMPARISON

A settlement where the population is An area located in the

Meaning very high and has the features of a outskirts, is known as rural.
built environment, is known as urban.
Includes Cities and towns Villages and hamlet
Life Fast and complicated Simple and relaxed
Environment Greater isolation from nature. Direct contact with nature.
Non-agricultural work, i.e. trade, Agriculture and livestock.
Associated with
commerce or provision of services.
Population size Densely populated Sparsely populated
Planned settlement exists in urban Developed randomly, based
areas, that are developed according on availability of natural
Development
to the process of urbanization and vegetation and fauna in the
industrialization. area.
Social mobility Highly intensive Less intensive
Always present at the time of job No such division.
Division of labor
allotment.

China’s Agricultural and Rural Development (Model Rural Development)

A very outstanding example of a successful rural development program is that of China. It has
only 8 percent of the world’s cultivable land but it has 20 percent of the world’s population. And
yet it has provided the basic needs of its 1.4 billion people without significant foreign assistance.

The Great achievements have been made in China’s agricultural and rural development. China's
grain output has grown steadily for years, and overall progress has been made in farming,
forestry, animal husbandry and fishery. Rural incomes have continued to rise rapidly, significantly
improving the rural living standards.

Here are the seven steps in the rural areas of China moving towards harmony and stability:
 •Abolished agricultural taxes and adjusted income distribution between the government and the
1st rural population.

•Provided subsidies to agriculture and stepped up efforts to support and protect agriculture.
2nd

•Fully lifted control over purchase and sale of grain, taking a decisive step towards market-based
3rd trading of agricultural products.

•Reformed tenure in collective forests to encourage the rural people to plant trees and protect
4th forests.

oReformed mechanisms to ensure funding of compulsory education in rural areas, making

5th compulsory education truly free in China.

oStrengthened the social safety net in rural areas to ensure basic livelihood for the rural
6th population.

•Abolished unfair policies and restrictions so that rural migrant workers may receive fair
7th treatment.

China properly handle major issues concerning agricultural and rural development
▪ The development of modern agriculture
First, we must continue to implement the strictest possible farmland protection and
water resource management systems.

Second, we must take unswerving measures to stabilize and improve the basic
operation system in rural areas.

Third, we must continue to upgrade agricultural technologies.

Fourth, we should continue to step up efforts to support and protect agriculture.

▪ On the development of new rural areas

First, we should improve rural infrastructure.

Second, we should further develop social services in rural areas.

Third, we should promote the integration of urban and rural social safety nets.

Urban Development
The Philippines is one of the fastest urbanizing
countries in East Asia and the Pacific. As early as
1980, urbanization in the Philippines was at 37.2%,
and by 1990 it had reached 48.6%. In 2000, urban
areas were home to 48.1% of the country’s
76.5 million inhabitants; by 2010, those areas
accounted for 48.9% of a total population of 94
million Filipinos.

This can bring many opportunities for growth and poverty reduction. Cities become engines of
growth if well planned and well managed.
Rapid urbanization in the Philippines has brought new jobs, educational opportunities, and better
living conditions for some. However, it has also brought challenges, which you’ll see when you
move around the streets of Metro Manila. It’s a large sprawling metropolitan area of over 12
million, with congestion that is estimated to cost US$70 million (₱3.5 billion) a day. Evidently,
there are problems associated with rapid urbanization.
If key stakeholders in the Philippines, namely government, the private sector, and civil society -
working in partnership - can take on these challenges with a needed urgency for action starting

Crime

Employment Education

Sanitation Health
Urban
Issues
Evironmntal
Housing
quality

Transportation Congestion

with top priorities, there is so

much that is possible. Cities
can indeed become
engines for competitive,
sustainable and inclusive
growth, giving residents new
opportunities with the
potential for lasting
impact.

Singapore: Model Urban

Planning
Singapore, a former
colony of Great Britain, is a tiny
city state. It lacks space and natural
resources. This diamond-shaped island is only
224 square miles with a population of 5
million. However, in spite of its natural
limitations, Singapore is successful in
attaining a more equitable and balanced
development of resources.

The Singapore model is a good example of transforming a

concept, theory or plan into an attainable reality. It has not
only considered the balanced development of business,
industry and housing but also the particular needs of the
people – their values, culture, and tradition. This is even
more difficult in Singapore because it has a multi-racial
society. And yet it has succeeded in accomplishing an urban development which is considered
phenomenal by Asian standard.

Singapore’s Urban Planning in Five Points

https://www.population.sg/articles/singapores-urban-planning-in-five-points

CONSISTENT PLANNING, SMOOTH UPGRADING

•Land in Singapore is carefully managed down to the very last hectare, with
each piece of land dedicated for a specific purpose.

DESIGNING FOR DENSITY

•Urban planners use a “checkerboard planning” approach that
separates high-rise buildings with low rise buildings and spaces.
This gives a feeling of spaciousness and prevents city-dwellers
from being literally ‘walled-in’.

BEING IN TOUCH WITH NATURE

•Singapore is touted as a ‘Garden City’, and for good reason.
Beyond interspersing our cityscape with greenery, there is a
larger focus on making sure that people are close to nature.
Wherever you live in Singapore, there is always a park,
waterway no more than a stone’s throw away.

KEEP YOUR FRIENDS CLOSE, YOUR NEIGHBOURS CLOSER

•Singapore has been home for a diverse group of people from its
early years, and has grown into a nation that celebrates a vibrant
rojak of cultures, united by a unique national identity. Since the
1964 Racial Riots, Singapore has taken great pains to ensure that
diversity doesn’t mean divisiveness.
HOME IS WHERE THE HEART (AND EVERYTHING ELSE) IS!
•Good neighbourhood planning and development helps to bring amenities
closer to people. Time and money can be saved from traveling if there is
already a good enough variety of basic services at the heart of our
neighbourhoods.