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Economic Freedom: Good for Third World
| Article
# : |
11138 |
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Section : |
CURRENT ISSUES
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| Issue
Date : |
3 / 1986 |
3,093 Words |
| Author
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Dan Mitchell
Dan Mitchell is a doctoral candidate in the field of economics
at George Mason University, Fairfax, Virginia. |
The economic expansion currently underway in the United States has not been a worldwide phenomenon. Most of the Western nations have experienced varying degrees of prosperity, but the communist countries and developing nations continue to be plagued by poor economic performance.
The economic stagnation of the Eastern bloc is not that surprising. The socialist economic policies have resulted in the substantial weakening of incentives for innovation and production.
The situation in the Third World, though primarily discouraging, does have some bright spots. Some nations have made dramatic strides, especially in comparison to those with similar demographic characteristic and resources, but with little or no progress.
Western aid has not been the savior that proponents hoped it would be. (To the contrary, its use often results in misdirected investment and corruption.) Countries receiving billions of dollars of aid have often done much worse than ones not so favored.
What, then, accounts for these differences? Why do some nations, like Singapore, South Korea. Hong Kong, Costa Rica, Guatemala, and South Africa, have higher standards of living or rates of growth than their neighbors? The best way to answer this a question is to examine the characteristics that seem to be common to the economies of countries experiencing growth and compare them to the characteristics of nations with little or no growth.
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