Tag Archives: developing countries

Developing Countries Care More about Environment

Thesis: Developing countries are more environmentally conscience than the developed world.

While this might come off as a bit backwards because surely the developed world with much more disposable income have the ability and the desire to be more environmentally friendly than their developing country neighbors, but I am going to prove this argument is wrong.

David Cheesewright, chief executive of Wal-Mart’s international business recently sat down and discussed this topic with the Wall Street Journal and said, “Surprisingly, it’s the developing markets that tend to be more passionate about green products. They do it from a very different dimension.” As can be witnessed by the graph below, areas that have a majority of developing countries are willing to pay extra money for products and services committed to making a positive social and environmental impact.

Green Energy Graph

This is exactly the opposite of the intuitive argument that the developed countries have a much higher disposable income and therefore should be more willing to sacrifice a bit more of this for a product that is environmentally safe. However as Mr. Cheesewright later went on to explain, “In developed markets, you tend to find it’s a much more aspirational purchasing decision. Whereas, in developing markets, it’s much more pragmatic. It’s about the realities of life. If you have to carry your water from a pump a mile away from your home, you love products like shampoos that don’t require water, or detergents that are very efficient. That’s why I think they’re more prepared to look for those sort of products.” People in developing countries do not have the luxuries us developed countries have, and so sometimes environmentally safe products just make more sense.

 

Opponents of this will argue that developed countries are reducing the amount of coal generated electricity they have, while developing countries are relying on this cheap electricity for much of their populations, and they would be right. However, these countries do not have the economic capabilities in place yet to utilize these much more expensive forms of renewable power. While we want/need to make some changes to help reduce the impact humans are having on the earth’s environment, we also want to help people in developing countries rise out of poverty and to an adequate standard of living. This may mean that these developing countries use more harmful sources of power for longer, hopefully the price of renewable energy keeps declining so that it will become more of an economically viable option for these developing countries to implement. As the WSJ reported, “The price reduction of renewables has been nothing short of dramatic, 80% in the last five years. The wholesale price into bid markets for these technologies comes close to zero. I think the coal companies are going to have to pay attention to these technology trends.” This reduction in price, as well as more initatives from developed countries and international organizations should help these developing countries implement more and more renewable energy sources into their power grids. The citizens of these countries will certainly appreciate it more!

Why Do Most Poor Countries Remain Poor

It is hard to believe but almost three billion people in the world live on less than $2.50 a day. Nevertheless, we tend to neglect the fact that people are still suffering from hunger in many developing countries. Some people claim that global malnutrition could fall 84 percent as agricultural productivity increases. Thus, some economists expect that poor countries will have an opportunity to escape from poverty traps. This, however, is not necessarily true. Of course, I also agree with the idea that higher agricultural productivity would alleviate global poverty but we need to examine what really causes poverty first. In other words, we have to know what the barriers are for poor countries that impede the growth of their economies.

The causes to poverty are various but the most common cause is corruption of government. When governments only exist to benefit themselves without properly functioning for their people, development or economic growth are nearly impossible. There are many international organizations or Non-governmental Organizations that aid poor countries but their aids are sometimes meaningless due to corruption. For instance, BBC news once pointed out that a large sum of money, approximately 32 billion dollar of aid (http://news.bbc.co.uk/2/hi/south_asia/2759789.stm), was ineffective to poverty reduction in a sense that it did not help solving poverty problems in Afghanistan. If the money was used properly to alleviate poverty, it could instead be used to build schools or improve health care systems and the infrastructures. The chart below shows corruption perceptions index of 2013, which measures perceived levels of corruption that are determined by expert assessments and opinion surveys. The chart suggests that countries such as Syria, Republic of the Congo, Afghanistan, North Korea and others that are considered as developing countries have also high level of corruption. However, developed countries such as Denmark, Switzerland, Singapore, Germany, United States and others have relatively low level of corruption. Thus, we can make a plausible conclusion that there is a positive correlation between the level of corruption and poverty.

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Another factor that causes poverty is developing countries’ heavy reliance on natural resources. It is paradoxical that natural resource wealth causes poverty. There are also many countries such as Russia and China that successfully created wealth by using their natural resources. However, countries like Sudan, Angola, Republic of Congo and other countries in Africa failed to distribute wealth to their people. In fact, the revenues from natural resources go directly to government officials and foreigners’ pockets, which enlarge the income inequality even more. This is simply because their corrupted governments do not spend their money on developing technologies that can extract natural resources without depending on technologies of foreign companies.

I believe that it is crucial to find ways to emphasize that poor countries cannot escape from poverty traps unless the level of corruption decreases. In order to do that, people in developing countries should get education. I also agree with other people’ perspective that malnutrition should be considered as the biggest problems among developing countries. However, it is also important for them to get educated so they can contribute to development of technologies and fight for corrupted governments for better economies in long term.