Students Again

Poor nations generally become poorer – while rich nations become richer. Explain the reason for this phenomenon as related to a nations economic efforts.

The growth of a nation can be predicted and studied by using a PP curve. Factors to look at are the goods for the present (mainly consumer goods) and goods for the future (capital goods, research and education).

Poorer nations tend to focus on the present goods. When a economy starts at a point on the PP curve that relies on present goods, the future curve will generally be small. This small shift in its future curve shows how much the economy grows. Poor countries in  general do not have the funds to invest in capital goods, research or education.

Richer nations tend to focus on the future goods. They have money to invest in capital goods, research, and education. These  nations start off on a point on the curve focusing on future goods. The future curve shows a great shift in the curve, which in turn, shows a higher amount of growth than the nations that focus on present goods.

Economic growth becomes harder for some nations because their focus is on aspects that do not grow. They tend to focus on present goods. It can be seen with the PP curve that growth can be great when focusing on future goods. When poor nations do not have these funds in the beginning to invest in the products that will grow the nation, they will have a hard time getting the money for these investments. They must grow the economy many times before they can get to the point where their growth can allow them to shift their focus on investing future goods. On the other hand, the richer nations have the money to invest in the goods that will allow for quicker economic growth. They can use the money and re-invests in these future products that will easily grow their economy. Futures goods for these rich nations are easily obtained.

How could the UN help poor nations?

The best way to help a poor nation is to send capital goods and money to specifically invest in future goods. Since these are relatively expensive, these could give a push start to help a nation grow their economy. They would not need to take money out of their economy to invest in capital goods. The capital goods can be used to produce goods that are  needed for the nation. Also, the money given to the nation for future research and education can develop the citizens. Schools and facilities can be built to enhance their education and knowledge. Each nation is different and their needs vary differently. Some need money while others need capital. If money alone is sent to some nations, the money might not be used for the purpose intended. That goes with every other form of resource sent, whether it is capital, consumption goods, or money. Each nation has to be evaluated individually to see which resource best helps their economy. If there was a clear plan to help these poor nations, nations would no longer be poor.