Royal University of Phnom Penh Institute of Foreign Languages

Department of International Studies

Root C auses of Economic Underdevelopment

April 19 , 2012

DIS E4.1

DIS410 Justice and Development Professor KHEANG UN

Written by:

CHEA Chanthearith ; HENG Titpanhavath ; LEANG Sovannarith ; SAY Vortana ; SOR Malispich

RUPP, IFL, DIS E4.1

Course : Justice and Development Topic : Economic Underdevelopment

There are without a doubt that economic underdevelopment has multiple internal and external causes in a given country or region. The roles of institution, physical geography, resources constraint, social structure, general inequality, and geopolitics matters and so on are hot research topics which are being dominated in recent economic development research papers conducted by many prominent scholars and researchers to define the causes of economic underdevelopment. Of course, there is no single explanatory factor effectively answering to the poverty reduction and fully applying to all countries worldwide. We shall examine four main factors namely institution, war and refugees, economic sanction and economic dominant from the western. For long term solution, building solid institution is dominated economic development theoretical concept in twentieth century and still has validity, and popularity arguments up to now. And it does matter to economic development or under development. To understand more about institution, let us take a look a country case study of North Korea and South Korea. These countries had so few differences after Korean Peninsula War and WWII ended. However, in comparison between them now, they have so much differences in term of economic aspect such as market economic liberalization, living standard, accession of healthcare services, life expectancy, education, literacy rate, birth rate, technology innovation, property right, growth rate in GDP and so on and in political aspect, the freedom of speech, human right advocacy and promotion and so on. South Korea is always away ahead of North Korea. Why are these two countries that possess past similar background such as culture, language, ethnic, economy and others become so different nowadays? Daniel W. Drenzner, a writer for foreign policy web site, viewed that it was the result from different institution producing different outputs. Author mentioned that the south economic institutions focuses and encourages investment and trade and

industrialization, enforcement rules and regulations, property rights, and education by investing more school building and policies, technology transfer, export-oriented markets etc. Meanwhile, the north institutions from different generation failed to adapt and adopt economic and political reforms and had no intention to do so. Author also stated that the north institutions failed to introduce private property, markets, private contracts, and economic and political freedoms. North Korea has stagnated the economy, and there is no sign that anything will be different under the new leader" Kim Jong-un (Daniel W. Drezner, 2012). Additionally, failure of the north to take
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RUPP, IFL, DIS E4.1

Course : Justice and Development Topic : Economic Underdevelopment

care of property rights were also central root causes leading to loss of workers productivity and willingness to invest. As we all know already that property is farmers life. There was no incentive at all if the property rights was take away from farmers and heavily taxed away by the states. This policies discouraged farmers and middle class level (Daniel W. Drezner, 2012). Therefore, it is neither geography nor culture nor clash of ethnic, but failure of the North Korea institution.

Sources: http://drezner.foreignpolicy.com/posts/2012/03/19/Why_economic_prosperity_is_still_a_bit_of_amystery.html Other internal factors are war and refugees. In this contemporary, states face another type of war, civil war, rather than war between countries; however, civil war injects more issues to the countries, and it is an obstacle to both social and economi c development. Solomon and Swart claim that no single internal factor has contributed more to socio-economic decline on the African continent and the suffering of the civilian population than the scourge of conflicts within and between states. (Solomon & Swart, 2004) Research on impact of wars on economies shows that, on average, non-warring African countries experienced an increase of 13% in GDP annually, while the warring countries experienced an 8% decrease (Ammons, 1996). Ayittey writes that in 1996, more than 20 million of Africans were refugees (Ayittey, 1998).
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RUPP, IFL, DIS E4.1

Course : Justice and Development Topic : Economic Underdevelopment

In 2002, the number of refugees and displaced people decreased to about 12 million (Zack-Williams, 2002). These people, who have lost their homes, jobs, and possessions, should be the ones to go to school, grow food, or work in manufacturing and government and business administration. Ammons writes that the movement of refugees and displaced people in Africa have greatest effect on the local administrative infrastructure, the local market economy, health and social services, transportation and communication systems, thus deteriorating social and economic development (Ammons, 1996). Basically, economic sanctions and economic dominance of the Western countries are two of other possible explanations in external causes of the underdevelopment. To start with, the economic sanction is the foreign policy instrument to punish the countries with harsh governing toward their population, commonly on the serious human right abuse (Garfield, 1999). In general, it blocks economically and financially their benefit absorption from either, regional or international economic activities (trade). The perception from the international practitioners is to get the sanctioned countries obey a certain standard rules in respecting the conduct of the international law as being the sovereignty states. The aims of the economic sanction is to pressure the government, owing to the fact that lowering in the government revenue brings about the impact of the decision in government body. Conversely, the economic sanction policy, which discourages trade, investment and tourism, hits the economy generally and consequently hurts the ordinary people. Myanmar case, for instance, the sanction by the regional institution and individual country such as European Union and the United States was imposed to force the military junta giving up yet respecting the result of the national election for nominating Aung San Suu Kyi to her power instead of the under house arresting political leader. The suppression from the Myanmar government was still continuing and the problem was not properly solved, yet the population has been experiencing the underdevelopment from years to years because of no foreign direct investment, no modernizations in the education system, no proper public health care, etc. (Committee, 2007). The implication of the economic sanction of those externals relatively has a standpoint in the underdevelopment causes for some cases, though this cause is not generally applied for all the developing country.

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RUPP, IFL, DIS E4.1

Course : Justice and Development Topic : Economic Underdevelopment

Secondly, the economic dominance from the Western countries leaves the poor country unsustainably undergo the development. In particular, the powerful countries take advantages from the trade activities such as the natural resource extraction and mining activity from the poor and yet leave them vulnerable to the destructed eco-system. According to dependency theory and imperial structuralism, the core comes and exploits the periphery that leads inequality between the two. Furthermore, the core in the periphery and the core in the core could cooperate with each other, and they exploit the periphery in the periphery that leads to inequality not only between but within the peripheries themself. Likewise, back to 1960, the Bougainville, in which the natural resources, such as mineral, coppers, gold, and silvers were subjected to the Australian Administration while the local were required to leave their traditional land. The nearby nature, such as rivers and streams were polluted, and the fish was died. The environmental damage started. The Australian mining company gained, and the local people were disharmonized from their livelihood (Ross, 2003). Another example is the land grabbing cases in Cambodia. Chinese investors cooperate with local companies that have shares from powerful people so that government reluctant to implement the rightful laws to protect the people. In short, there is abundance of root causes that lead to economic underdevelopment for a country or a region. Weak institution is the most dangerous factor, so states need to strengthen their institution to ensure the stability of the country in order to create an attractive environment for economic development. Furthermore, states need to avoid conflict between and within their own countries in order to avoid bad affect from the issues. Without a doubt, external factor also curse the states to fall in the economic underdevelopment. Economic sanction and economic dominant from the Western affect economic development of the vulnerable states. They could not compete, and finally they fall behind those developed countries. In some cases, exploitation occurs in those vulnerable states that lead to inequality between and within states.

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Course : Justice and Development Topic : Economic Underdevelopment

References

Ammons, L. (1996). Consequences of War on African Countries Social and Economic Development. African Studies Review, 67-82. Ayittey, G. (1998). Africa in Chaos. New York. St. Martins Press. Committee, E. A. (2007). The Impact of Economic Sanctons. London: House of Lords. Daniel W. Drezner. (n.d.). http://drezner.foreignpolicy.com/posts/2012/03/19/Why_economic_prosperity _is_still_a_bit_of_amystery.html. Retrieved March 22, 2012, from htt://drezner.foreignpolicy.com. Garfield, R. (1999). The Impacts on Economic Sanction on Health and Well-being. London: ODI, Oversea Development Institute. Ross, M. (2003). The Natural Resource Curse: How Wealth Can Make You Poor. In I. Bannon, & P. Collier, Natural Resources and Violent Conflict (p. 27). Washington DC: The World Bank. Solomon, H., & Swart, G. (2004). Defending African Unity Can the Peace and Security Council of the African Union Succeed? The African Centre for the Constructive Resolution of Disputes (ACCORD), 10-15. Zack-Williams. (2002). Africa in Crisis: New Challenges and Possibilities. Pluto Press., 1-14.

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