Economic growth and Small Countries
Kathy Brophy
ECO204: Principles of Microeconomics
November 21, 2010
Phelicia Price

Economic growth and Small Countries Economic growth in many countries is a slow bitter process. With disease, current high population numbers, growth in population, limited resources, and much more will limit a small and poor country’s from being able to build capital. The AIDS virus has taken many innocent victims and left others ill and unable to work. The numbers of AIDS victims are large by any standard. I was worried about the virus getting close to home when I learned of its existence in the late 1980’s. Since then I have come across several persons that currently have the virus or have died from the AIDS disease. Healthy individuals are needed to work in order to build product for consumption and exporting. Economic growth through resources will build much needed capital, which will increase a countries wealth in time. The HIV/AIDS pandemic has been most devastating for the smaller uneducated countries around the world. (Case, Fair, & Oster, 2009) The HIV/AIDS pandemic has been the most devastating disease in the world. Forty million were infected with the virus before the year beginning 2006. Twenty-five million people died from aids by the end of 2006. (Case, Fair, & Oster, 2009) “In 2005 alone, 3.1 million people died of AIDS and 4.9 million were newly infected with HIV (Case, Fair, & Oster, 2009)”. These numbers are large enough, but they are even larger in any of the small countries in Africa. Many countries as sub-Saharan Africa, the AIDS disease is the leading cause of death. Population growth will increase the number of AIDS victims too. Moreover, the AIDS disease can be passed from mother to child during child birth or after through breast feeding. Education is needed in prevention of AIDs and other deadly diseases. When much of the country is devastated from rapid disease growth, many resources will be left untouched. Hard work from healthy individuals is needed to build resources, which in turn will build capital. Much of the problem is poor health and low income. (Case, Fair, & Oster, 2009) Much of the work force is physically driven in the smaller poor countries. For this reason, health and nutrition is necessary for the work force to survive. Nutrition and health programs are needed to guide individuals to maintain better health. Many of the countries disease stricken are poor and have low incomes. Good health is hard to maintain with a low income. I know this from experience. I struggle to maintain doctor visits for myself and my children because of my low income. There are five thousand people to one physician in Sub-Saharan Africa and South Asia. Parasite infections are common. Many suffer and/or die from these infections. “Infant mortality runs 20 times higher than in the United States. (Case, Fair, & Oster, 2009)” Many people in the small disease stricken countries are poorly educated. (Case, Fair, & Oster, 2009) My low income is the reason for my returning to college. Education is important to the development of economic growth for me and many more. I have realized that a college degree in the United States is necessary for obtaining a career that pays a decent salary. Although a college degree may be necessary in the United States, it is not necessary in many of the smaller countries. Many persons in the smaller poor countries would benefit however from obtaining a certain level of education in order to survive. Although children at school-age receive a small amount of education, the illiteracy rate is still high. (Case, Fair, & Oster, 2009) According to the World Bank, reducing poverty in the 1990s was compromised by inequality in some of the poorest countries. Sub-Saharan Africa and South Asia’s population and poverty headcount is high compared to other countries in Europe, Central Asia, the Middle East, and North Africa. These small countries accounted for much of the world’s poverty level. Predicting to 2015 in this same course, more persons will maintain the poor status because of the increase in population. (The World Bank) Population growth will increase consumption, decreasing product which can be exported. Moreover, many countries cannot produce enough food products to consume much less export. For this reason starvation is large in many small and poor countries. In my opinion, this is one of the reasons education is badly needed in these countries. (Case, Fair, & Oster, 2009)
Family planning and modern forms of birth control are important mechanisms for decreasing fertility, but by themselves have had rather limited success in most countries where they have been tried. If family-planning strategies are to be successful, they must make sense to the people who are supposed to benefit from them. The planners of such strategies must understand why families in developing nations have so many children. (Case, Fair, & Oster, 2009)
Population growth can be slowed if women were educated in the subject of birth control. At the tender year of seventeen, I gave birth to my oldest child. If I had been educated as my daughters have been, I would have waited to have children until I was older and more prepared to become a mother. Birth control could help control the over growth of the population significantly. (The World Bank) With a population of 6.6 million in the world as of 2008, three-fourths of the population belongs to more than 200 developing countries. These numbers are evidence to why birth control and education is needed. It seems many are born into poverty and live in poverty their entire life. Moreover, their children are a product of this environment too. This is a vicious endless cycle. Many believe the poor is not able to invest or save to relieve themselves and their families from living in poverty. (Case, Fair, & Oster, 2009) The small amount of capital is reason for much of the constant poverty. Physical capital used in factories, machinery, farm equipment, and other productive areas limits productivity and output of resources. Much of the output is consumed, therefore it does not have a chance to grow and become investment output. (Case, Fair, & Oster, 2009)
The “vicious-circle-of-poverty hypothesis suggests that poverty is self-perpetuating because poor nations are unable to save and invest enough to accumulate the capital stock that would help them grow. (Case, Fair, & Oster, 2009)”
Although many countries stay in the same vicious cycle, many are able to overcome this seemingly endless cycle. The gross domestic product (GDP) per capital was lower in Japan than many of the countries with current low GDP. With much work, a country can turn their countries fortune around for the better. Countries can invest their surplus above consumption and build capital needed for investment. The investment maybe small in the beginning, but it can grow in time. Many rich people in smaller countries invest their income in the United States and Europe. However, if they invested their income at home, capital would build quicker. I live in Horry County, South Carolina. I am careful, along with many others to invest my money in my home town. I have been in many conversations in which many others in Horry County do the same. Investing at home will help your community’s economic growth. Landscape of developing countries has many unused factories and machinery that could produce capital. (Case, Fair, & Oster, 2009) If the land was used as investment instead of staying dormant, capital would be easier to build. Of course this takes much hard work and time. Again, health and education are important factors in developing land and more. Agriculture, export and importing goods from developing lands and investments in the lands can be valuable resources for economic development for many of the smaller and poor countries. Farming techniques need to be learned and will be needed for a small country to learn to produce effectively. Import substitution is another strategy that can turn into a major resource. Developing local industries on these lands is needed in manufacturing goods for building capital and replacing imports from other countries. Ideally, a successful country will export far more than importing. Exporting goods will help a poor country overtime build capital and become wealthier. A certain amount of exporting is needed to maintain proper relations with neighboring countries and other countries too. Policies in exporting and importing are necessary in making each of them successful. Many governmental policies affect economic growth too. (Case, Fair, & Oster, 2009) Government policies tend to discourage investment at home. Price ceilings, import controls, appropriation of private property keep many from investing at home. Inefficiency and corruption in government can be difficult for many countries to overcome. Corruption is hard to prove, but also hard to control too. Germany leads countries in controlling corruption with Pakistan and Nigeria coming in last. Economic growth is necessary for a countries wealth to increase. (Case, Fair, & Oster, 2009) Economic growth through resources will build needed to build capital. Capital is needed in order to increase the wealth of a country. Resources as dormant land, equipment, buildings could be used in producing product. The product produced will be used for consumption and exporting. Education is needed in order for individuals to learn how to make the most from the land and other resources available to them in making products. The more products produced the wealthier a country will become. Exporting and importing will increase capital and wealth of a country. Education is also needed in prevention of disease and controlling large population growths. Many individuals have lost their lives to the AIDS disease. The diseases growth needs to be controlled through educating the individuals. The larger the population, the larger the countries consumption rate will be needed. Controlling population through birth control needs to be taught to every woman. Prevention of spreading the disease further is needed, mother to child or adult to adult. Moreover, prevention of the disease will enable more individuals to work the land. This over time will increase the investor’s income. If investors would invest in their countries economy instead of investing in countries as the United States, their countries wealth and investments would be healthier. Building capital is needed in order to build small countries wealth. (Case, Fair, & Oster, 2009)

References
Case, K. E., Fair, R. C., & Oster, S. M. (2009). Principles of Microeconomics, (Ninth Edition). Prentice Hall: Pearson Education, Inc.
Poverty. Retrieved on November 21, 2010 from The World Bank Website: http://data.worldbank.org/topic/poverty