Development economics focuses on the economic, societal, and institutional means necessary to rapidly progress living standards for most poor people in developing countries (Todaro & Smith, 2012). Development economics plays an essential part in diminishing inequality globally (Routlege, 2003). The economic development of the developing countries is as significant as that of the developed nations since they all have one future. Therefore, development economics must ensure structuring suitable public policies that will enable great economic, institutional, and societal revolution of societies as a whole in a short period to reduce the gap between ambition and realism (Todaro & Smith, 2012). Canada is one of the countries aware that future success is intertwined with other countries globally. The government recognizes that failure to attain success in the political, financial, societal, and environmental sectors in developing nations will affect its safety and affluence in the long run. This paper establishes the practical and reasonable policies that progress economic development and uphold social welfare, mainly for developing nations, by explaining the economic principles and how to incorporate them in global development and addressing the role of developed countries in international development. As an example, the research paper will focus on Canada International Development Agency as the case study.
Relevant literature review
An experimental and observation body of literature has emerged on economic development and the role of developed countries in economic development. The concept of economic growth provides an understanding that every nation must play its part to achieve economic development. Articles and website sources present an outline and in-depth understanding of economic development and the role of the Canada International Development Agency in international development. The book “Economic development” by Tudaro Smith has captured much information on economic development explained by other studies. Other articles like “the Canadian International Development Agency: New Policies, Old Problems” (Black &Tiessen, 2007) provide an insight into the role of developed countries in international development. “Creating the World’s Best Development Agency? Confusion and Contradictions in CIDA’s New Development Policy” (Brown, 2008) provide an insight into the importance of effective aid delivery in economic development.
Principles of economic development
Economic development is achieved by creating and retaining sustainable living and a high value of life globally. As much as every region is faced with distinctive challenges and prospects, economic development is guided by shared principles within the area and incorporation with other countries worldwide. Areas should use an integrated approach to achieve sustainable and innovative products (House, McGrath, 2004). The administration, trade, education and society should work to form an efficient economy by formulating long-term venturing plans. The strategy should be encouraging the local projects by promoting the requirements of the local population, employees and businesses. The integrated approach strategy should promote constant employment and revenues by focusing on local competitive returns. An efficient long-term investment plan is a foundation of creating an economy capable of thriving in the international marketplace and encouraging social equity.
Every region requires a vision and an approach to accomplish economic development. Every sector should be constantly concerned and involved in vision development and realization efforts. All the steps should diminish poverty through job creation, matching jobs with residence skills, and improving individual skills. Improved skills can be accomplished by investing in good quality schools and constant education and training available for everyone. In as much as globalization has significantly contributed to economic development, encouraging local entrepreneurship to support and build local businesses and industries capable of doing well locally and internationally. The companies and industries should fill the gaps and niches in the nation and encourage a wide variety of specific business clusters depicting local gain to supply local and international needs.
Indicators of development
Gross national income is the most widely used gauge of economic level. It is used as an indicator of the relative economic welfare of citizens in diverse countries. Gross national income is arrived at by summing up the domestic and foreign value-added alleged by a nation’s inhabitants exclusive of deductions for depreciation of the domestic capital stock. The gross domestic product determines the overall value for the ultimate utilization of the economic production output by the residents and non-residents. The difference between the gross national income and the gross national product is influenced by the number of income residents receive from a foreign country (Brezina, 2011).
Apart from measuring incomes, assessing a country’s standard health and education accomplishments is essential, mirroring core potentials. The health indicators include life expectancy, rate of malnutrition, death rate, and the basic birth rate. Life expectancy is the regular quantity of years newborn babies would be alive if exposed to the mortality threats existing in their group at the instant of their delivery. Malnutrition can be defined as the consumption of too little food, which cannot sustain the standard point of activity—high fertility rates are both a reason and an outcome of underdevelopment. The birth rate is therefore accounted as an indicator for underdevelopment. Literacy is the proportion of mature men and women stated or approximated to have the fundamental capability to read and write. Practically, literacy levels are usually lesser than the reported figures (Todaro & Smith, 2012)
Characteristics of developing countries
There is a massive gap in levels of living and productivity contributing to economic development between developed countries and developing countries. Reduced income levels discourage venturing in schooling, health, and transportation and communication, which result in too little productivity and economic dormancy. This is commonly referred to as a poverty trap or circular and cumulative causation (Berger, 2009). Human capital is as necessary as the level of income in economic development. Unlike developed countries, the developing regions have delayed growth in nourishment, health, and education. Developing countries are faced with problems of undernourishment and a high level of illiteracy. The issue of inequality is a global problem. It is an issue for both the developing and the developed nations. Inequality is higher in developing countries. Besides income inequality, poverty is a significant concern in international economic development. Poverty and inequality are both causes and resultants of underdevelopment.
The developing countries are faced with significant governance problems (Jreisat, 2002). These nations invest significantly in political accommodations due to the frequent civil wars and conflict. Conflicts are common. This is due to the high social fractionalization in racial, linguistic and other varieties of social division. Great diversity increases the chances of internal wars and political instability and vice versa. Conflict derails economic development due to the deaths and destructions associated with it. In a contrasting view, diversity is a source of creativity and advancement. Effective social integration can result in successful economies. Diversity is, therefore, a vital establishment of either success or failure of efforts of progress. Levels of industrialization are a determinant of national economic power. Industrialization is linked to increased income and productivity (Kruse, Mensah, Sen, Vries, 2021). Developing countries have low industrialization, and they depend on primary exports. These countries depend highly on the few agricultural and mineral exports that are less advanced in skill and technological content. Other characteristics of developing countries include adverse geography, underdeveloped markets, and increased rural population.
Role of developed countries in economic development (CIDA)
To achieve economic growth, efforts need to stimulate sustainable long-term, nationwide, regional, and international economic growth. This way, the developing nations will afford to invest in the welfare of the people while building resilience to the community, financial and environmental distress. Export income, private savings, domestic investments, and external credit are the principal foundation of financing for economic development. Identifying practical opportunities and the main challenge restraining the economic progress of a developing nation is the initial stride for economic development. Economic growth should be environmentally oriented in the long run to ensure the economy’s stability in developing nations. Developing and developed economies must balance their economic strategies with effective environmental management. This stability needs policies, strategies, and rules that progress natural resource administration maintain sustainable resource utilization, and adjust to climate change certainty (Todaro & Smith, 2012).
CIDA’s economic development plan form sustainable, lasting economic development that will raise revenue creation, generate employment, and direct regions to diminishing poverty in developing nations. CIDA focus on specific investments that maintain the sustainable economic development of the manufacturing and trade sectors in developing nations. These investments add to the established foundation on which practical businesses and industries prosper, increasing the prospect for employment in the official economy for their society and their aid to the community assets accessible for venturing in the wellbeing of the residents.
The private sector plays a critical role in economic development. Nations with diverse and stable private sectors usually have a high rate of development and poverty lessening. Encouraging efficiency and competition in businesses in growing nations is essential in inspiring economic development and creating new employment chances. Developing nations have challenges in founding and running their businesses. They require aid to reach international standards. CIDA supports opportunities that reinforce support for the expansion andand escalation of small businesses, enhance output and sustainability of the enterprises, and support and boost the accessibility of financial services. (Douglas & Kindornay, 2013)
Humans are at the core of economic development. Nations need to create ways in which people attain their potential by creating jobs, encouraging businesses and innovations. Most residence of developing nations lacks the skills, informal employment, and requirements to venture into entrepreneurship. CIDA supports actions that enhance the necessary skills preparation and the awareness needed for proper market contribution. It also plays a role in boosting the accessibility of the suitable, significant and planned place of work education opportunities, and sustaining appropriate, outcome-based education proposals which inspire business development, market growth and efficiency.
For a country to achieve economic development, the right environment and institutional frameworks must be set to promote creativity and investment. CIDA offers aid for developing nations to achieve efficient institutions sustaining economic development that are clear and governed responsibly and reasonably to profit all citizens, and the necessary laws and policy strategies that encourage productivity and boost sustainability in creating jobs. CIDA also supports the government in managing the natural resources reliably and sustainably, especially in the mining and farming sectors, considering the effects of climatic change to benefit the community and the financial welfare of people.
In understanding the broader view of global economic development, inequality in the developed and the developing countries would be explained and understood differently in Dependency theory and the Structural change theory. Structural change theory focuses on policies that shift the economic composition from agricultural practices to industrialization. The shift is required for all economic purposes (Nassif, Feijo & Araújo, 2015).
. A significant limitation of the structural theory is the emphasis on the pattern rather than the theory—dependence theory analysis developing nations as reliant on developed nations. If advocating for economic development was to apply dependence theory, the emphasis would be on developing nations becoming less entangled with wealthy nations (Tausch, 2010). The theory has its weaknesses. First, it does not give approaches on how developing nations can set off and sustain economic development. Secondly, the actual economic practice of developing regions has been generally pessimistic. Both theories provide insight into economic development in developing countries.
To achieve economic development, developing nations need to respond to the increasing global competition. Development needs to be more balanced, emphasizing the private sector and investment in all regions. The economic approach must present the constancy business needs, make markets more vibrant, practical governments that back investment and development and sustain people to accomplish their ultimate potential. Developing nations support developing nations through different organizations to achieve international economic development. CIDA has been mandated to support research and development. The Canadian government has tasked the organization with developing and charitable guidelines and programming. The aim of the Canada International Development Agency can be grouped into three. The first objective is humanitarian internationalism which focuses on decreasing poverty, especially in developing nations. The second objective is commercial factors, particularly trade and investment associates specifically in middle-income nations. Lastly, the Canada International Development Agency is tasked with security interests where they assign resources for purposefully significant partners. The Agency intends to lower poverty levels, uphold human rights, and encourage sustainable advancement in a way that aligns with the country’s foreign guidelines. Economic development involves creating theories that help determine policies and practices that can be implemented. Structural theory and dependence theory are based on developing countries. The structural theory focuses on internal factors, unlike dependence theory, whose concepts are external.
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