Countries have different levels of development and economic prowess creating the cause for their inequalities. Over the years, countries have been classified in terms of their levels of development with the lowest being poor. This classification system has led to the question about the differences between poor and wealthy countries if any. It is true that poor countries are different by considering the fundamental economic principles. First, wealth depends on efficient trade for goods and services that requires investment in infrastructure. Wealthy nations have the capacity to invest and implement trade processes in spite of their nature, scope, and terms of agreement.Conversely, economically developed nations are richer with higher financial resources that are subsequently used to invest in core sectors like education, health, manufacturing, and other basic sectors that support their wealth. Poor countries, on the other hand, do not have similar levels of economic development to generate sufficient resources to handle their increasing demands; rather, their revenue generation must be complemented by domestic borrowing, international loans, and trade agreements that sustain their basic economic functions (Krugman & Wells, 2012). Coupled with political, cultural, and geographical complexities, these countries have remained different, some have stagnated economically.
Firms and markets can increase the wealth of poor nations depending on their nature and scope of involvement within their respective economies. Firms can invest in different service and production sectors to exploit local resources while increasing employment and flow of income. In addition, business expansion into international markets attracts foreign currency and balance of trade. Benefiting poor countries does not only require connecting producers and buyers, but also processes that add value to commodities in terms of marketing, identification of opportunities, and branding. This increases wealth through trade that is the central challenge for poor countries.
Markets, on the other hand, have the capability to increase wealth in poor countries. As explained by Skousen (2013), wealthy nations command not only large market segments but also the ones with significant profit potential and development of sustained international relations. Similarly, markets can help increase the wealth of poor nations by creating demand for their commodities, and opportunities that can be exploited cost effectively. Markets are also required to adjust their regulatory frameworks to accommodate goods from poor countries to level the competitive landscape. With such market functions and business operations, poor countries experience increments in their wealth through trade, profitable endeavors, and production depending on dominant economic forces.
Experiencing wealth increments is a consequence of coordinated international and local trade functions including their supporting production elements. This justifies application of the laws of universal validity so that every economic action conforms to minimum thresholds of employment contracts, management of labor market, formulation of efficient economic policies, and other requirements that support sustained economic progression. Although some may not be applicable in the countries, they must conform to the ones that reflect their operating requirements. On the question of democracy and freedom, democracy depends on individual nations and do not have a universal definition as freedoms depend on complex interrelated factors.
In summary, nations have differences in their economic development and wealth depending on their level of trading, international relations, and investments in their core infrastructure. These differences have resulted in the existence of poor nations whose wealth can be increased using markets and firms. They have the potential to increase wealth through trade, foreign exchange, the balance of trade, production and other processes that support profitable economic functions. Achieving wealth increments further requires conformity to universal economic laws and provision of basic human rights. Application of these elements ensures that poor nations are positioned to exploit emergent opportunities with a highly productive workforce.
- Krugman, P., & Wells, R. (2012). Macroeconomics. Canada, CA: Worth Publishers.
- Skousen, M. (2013). Economic Logic. New Jersey, NJ: Regnery Publishing.