Why Are Poor Countries Poor?

Explaining Economic Underdevelopment

The three major traditions in comparative politics—rationalist, culturalist, and structuralist—deal with or approach the
issue of poverty and underdevelopment. Many people believe, for example, that the poor are poor solely because of
their own personal attributes (laziness, lack of ambition, lack of education, irresponsibility, etc.). This opinion, it is
important to note, has an important implication: if the poor are wholly responsible for their poverty, this suggests that
the poor (from individuals to whole countries) should be left largely on their own to solve the problem of poverty. That
is, the poor themselves must create the conditions for their own transformation, which implies, in turn, that any efforts
by others to help them may only exacerbate their situation of poverty rather than improve it. This is because helping the
poor only “enables” them, whereas forcing them to fend for themselves may lead them to be creative or to work harder
or better. The old saying “Give a man a fish and he eats for day, but teach him to fish, and he eats for a lifetime” loosely
fits into this line of analysis.

Other arguments about poverty take a more “radical” slant. Most of these stress the exploitation, greed, and massive
inequality that characterize contemporary capitalism. In this view, the cause of poverty is not to be found in the
decisions that the poor make (or their lack of skills, education, or willingness to work hard), but in the positions they
occupy within the broader economic structure (or system) at both the national and international levels. A particularly
popular version of the radical argument is that the poor are, essentially, helpless victims of a corrupt and evil system.

Defining Poverty
The most common definitions of poverty center on its material aspects, which makes intuitive sense. Accordingly,
poverty is usually defined as the lack of sufficient resources to meet the basic necessities of life. Thus, a person without
enough food to survive, without access to clean water or to adequate shelter, is considered to be living in poverty.

To Be Poor or Not to Be Poor? A Rational Choice Perspective on Poverty

“People,” a rationalist might assert, “do not choose to be poor.” Yet there are perhaps billions of poor people and, by
extension, dozens of poor countries and societies.

The very first principle in rational choice, of course, is that all of us, including the extremely poor, are rational or self-
interested actors. This leads to a simple deductive statement: the very poor behave in a manner meant to make
themselves better off, Samuel Popkin (1988) explained it this way: in very poor countries, certain economic activities
carry a very high risk, especially to those individuals with little or no margin for error. Most individuals in these destitute
countries will therefore engage in practices that minimize their risk of failure—thus ensuring their chances of survival—
but this may also result in relatively low levels of productivity.

Breaking the Cycle of Poverty

Another very important set of actors is political leaders. Indeed, political leaders may be the most important actors in
any analysis of the problem of national poverty, given the special position they occupy in society. For, unlike all other
actors, political leaders control the preeminent political institution within any country, namely the state. And it is
through the state that the incentive structure facing poor people can be reshaped.

Rational Choice and the State

Ronald Reagan famously asserted in his 1981 inaugural address, “Government is not the solution to our problem;
government is the problem.” By “government,” Reagan was referring to the national government—the state; and by
“our problem,” Reagan was referring primarily to the economic woes the United States was facing at the time.
The State as Solution or Problem?

The discussion on rational choice, the assertion that poor countries are poor because they lack a strong and effective
state is, in some respects, counterintuitive. “Look around the world,” many skeptics would say, “and you’ll find dozens of
corrupt leaders and governments that have done nothing but run their national economies into the ground. The solution
is not more government, but less government.”

Poverty and Corruption: A Rationalist Perspective

To resolve the problem of corruption requires that we have a clear-eyed understanding of its underlying rationality, as
opposed to thinking of corruption as a product of personal venality, which then might be solved by simply installing
“virtuous” leaders.

Cultural Explanations of Poverty:

The Bad and the Good Cultural explanations of poverty begin with the assumption that culture is more than just a
reflection of economic or political forces Max Weber, for example, adopted this position, when he argued that culture
was a significant—factor in the rise of Western Europe as the world’s first center of capitalism. On this point, Weber
surmised that Europeans, notably Protestants, had a particular affinity for capitalism, which was represented in his idea
of the “Protestant ethic.” explaining why poor countries were poor was as easy as pie: they lacked the appropriate
cultural values and practices that made sustained economic development possible.

” This original cultural view is referred to as modernization or (classical) modernization theory ” According to
modernization theory, it was possible for poor countries to follow in the footsteps of the West, but only by ridding
themselves of their supposedly debilitating and “backward” cultures and embracing modern, Western values.

One of the most prominent of these early cultural theorists was Oscar Lewis, whose work on “slum cultures”—or
cultures of poverty—in Puerto Rico and Mexico provides an interesting and still very useful perspective on the
relationship between culture and poverty.

Oscar Lewis’s Cultures of Poverty

Cultural factors should always be examined—indeed, must be examined— within larger socioeconomic and political
contexts. This is exactly what Lewis did in his analysis of poverty.

The individuals who live in poor communities typically share a common set of values, beliefs, and practices that
distinguish them from the non-poor. This distinctive set of values, beliefs, and practices constitutes a “way of life” or a
culture (subculture), which Lewis dubbed a “culture of poverty.” In Lewis’s view, a culture of poverty is not merely
descriptive of poverty stricken communities but is also a key force that reproduces poverty in that community over time.
This is why he used the phrase “subculture of poverty” rather than the more inclusive “culture of poverty.”

One of the most crucial characteristics of the culture of poverty, however, was the “lack of effective participation and
integration of the poor in the major institutions of the larger society”, many critics of Lewis felt he was “blaming the
poor” for their own conditions of poverty.

To Lewis, the culture of poverty was an expression of agency that was highly constrained by the (structural) power of
capitalism. As Lewis explained it, “many of the traits of the culture of poverty can be viewed as attempts at local
solutions for problems not met by existing institutions and agencies” That is, even if the people in a culture of poverty
have viable opportunities to increase their wealth and productive powers, they may continue to be poor because their
values and beliefs systematically lead them to make the “wrong” decisions.
Keeping the Poor Down? Structural Explanations of Poverty
Structuralists are also very concerned with constraints; some might even say they are obsessed with them. Structural
explanations of poverty, argue, by extension, what leaders of poor countries do. They are still going to be poor. Thus,
poor people can save money for the future, learn new and valuable skills, invest wisely, have smaller families, and
otherwise do everything they can to improve their lives. Similarly, political leaders can change the incentive structure;
they can build infrastructure, create public goods, and encourage economically efficient behavior. Yet none of this will
guarantee a better, more prosperous life—especially at the collective level.

From the “Development of Underdevelopment” to “Dependent Development”

DEPENDENCY PERSPECTIVE

Why Nations Fail- The Origins of Power, Prosperity and Poverty (2013) by D. Acemoglu and J.A.
Robinson. answers the question that has stumped the experts for centuries: Why are some nations rich
and others poor, divided by wealth and poverty, health and sickness, food and famine?
Is it culture, the weather, geography? Perhaps ignorance of what the right policies are?

The basic point is clear: poor countries occupy a structurally disadvantaged position in the world economy such that
there are very strict limits on the level of economic autonomy and prosperity they can achieve. The dependency model
seemingly leaves no room for poor countries to ever break the bonds of poverty. The economies of Japan, South Korea,
Taiwan, and China are all major exceptions to the assertion that poor countries must remain stuck in poverty: all four
East Asian economies have made very decisive moves out of the periphery. These successful cases present a challenge
to dependency theory. The question “Why are poor countries poor?” it is important to see if dependency theory, or the
structural approach more generally, is able to explain anomalous cases

One of the first to take on this challenge was Fernando H. Cardoso (sociologist, political activist, former president of
Brazil). Cardoso (1973) introduced the concept of “associated-dependent development,” which was based on the
argument that,

 Under certain conditions, it was in the interest of core countries and their corporations to promote economic
development in the periphery. As labor costs rise in core economies, for example, it makes economic sense to
relocate production into lower-cost areas. A country in the periphery with an ample supply of the right kind of
 labor, as well as an “attractive” environment for investment (e.g., low tax rates, minimal health and safety
regulations, a stable political system), could be one of those areas.

 Significantly, another important criterion was the existence of a highly capable authoritarian state, which was
needed to keep tight control over labor and ensure that the interests of foreign capital would not be
challenged. Under these conditions, Cardoso posited, “the interests of foreign corporations [could] become
compatible with the internal prosperity of the dependent country. In this sense, they help promote
development”.
 One of these comes from a structural theory known as world-systems theory, which shares many assumptions
and principles with dependency theory, but also differs from dependency in that it offers a more dynamic
explanation of economic development in the world economy, in part by emphasizing the systemic as opposed to
strictly structural aspects of capitalism.
 The emphasis on systemic elements suggests a stronger focus on process. In world-systems theory, capitalism
never rests, but is instead in constant motion: expanding and contracting both on a short- and long-term basis;
shifting from one center of accumulation to another; constantly incorporating and integrating new areas and
markets; creating and transforming organizational forms and practices; and so on.

Conclusion

In the end, then, the simple answer to the question “Why are poor countries poor?” is basically the same for most, if not
all, historical structuralists: poor countries are poor because of the unavoidably exploitative nature of capitalism. The
international arena is designed in such a way by the exploiting countries that they will be benefitted by the peripheries
and will get rich and richer. The grave concern is for the poor and dependent countries that if china, japan, south korea,
Taiwan can move out of the peripheries then the rest of the peripheries should struggle to get out of this suffocating
economically exploitative internationally designed system by the wealthy countries.