CONTEXTUALIZING DEVELOPMENT ESSAY
As a Business leader, you have been asked to develop a short brief on the development experience of your own country.1) Where in the theoretical development spectrum would you place your nation?
2) What are some of your own experiences that support your position?
3) How would you evaluate your nation’s development experience in light of the above theoretical constructs?
Solution: As per the theories are given in the book and after viewing my own countries past economic performance and expected future performance. I can assume my nation; the United States’, place on the list. The United States of America has, from the very beginning, been a capitalistic economy. In fact, according to history America was the country behind the success of the capitalistic economic system. Capitalism is a financial system which promotes free market economy and ensures that businesses be owned and run by private owners, instead of the government. The idea is contrary to socialism, which claims that ownership of companies to be given to the state (Perkins & Lindauer, n.d.).
The United States of America is not a 100 percent free economy though. Even though it is the premiere of the free market economy, it is still a somewhat mixed economy. It provides Medicare and other facilities to various members of the American society, including; senior citizens, women, and children. But, the significant portion of the American economy is consumed by its military. Unites States has a large military industry which requires a substantial amount of cash from the government, which the government provides from the taxpayer’s money. Hence, the mixed economy.
For this reason, I would say that the Solow Growth Model is the best fit for us. Robert Solow’s idea that the country’s overall productivity impacts its economic performance. The plan that the American economy does not go back to what it was like during the Great Depression leads us to turn towards the Solow Growth Model, which claims that the higher the productivity, the better the condition. If we look at the recent economic situations of post-Great Recession, we see that the reason behind the current subprime mortgage bubble burst was the predatory lending. Predatory lending involves giving loans to people who usually do not have enough income to pay back those loans. Hence, investing in nonproductive sectors led to an economic recession.
The United States has been following the Solow Growth Model after the World War II and back then till the present days, the country’s economy has grown significantly. It has also helped individual developing nations, since the signing of the Washington Consensus. However, here again, I would like to add that most of these countries that America helps through Washington Consensus are countries that have not shown any profit in years. Nations from South America and Africa lag behind economically.
Though America is a prosperous and thriving economy, in my view it needs to perform better economically. The United States has recently become the go-to place for any wannabe who wants to strike gold and claim himself an entrepreneur. People take loans from American banks, and venture capitalists and most of these entrepreneurs do not perform well. It results in their business going bankrupt and the lending institution suffering financially. I am of the view that America needs to be more careful in investing its money. It should invest in ventures that have a higher probability of giving a good return.
Perkins, D. H., & Lindauer, D. (n.d.). The Economics of Development.