-Advice for creating a strong economy where one doesn’t currently exist
So, you’ve become the leader of a country that isn’t exactly an economic powerhouse, and you don’t know where to start? Well, we have the answers for you.
Simply put, the reason why your country’s economy sucks is because you can’t attract foreign investment. It really is that simple. Don’t believe me? If your stagnant economy is in the top 50 on either of these lists, please, let me know.
I’m guessing that after looking at those lists, you’re saying something like “those countries have tons of natural resources or skilled labor.” And yes, most of them do. However I guarantee that your country has the most valuable commodity on the planet: people.
The point of all of this is that while having physical exportable resources to export would be convenient, but it isn’t necessary. Countries with an accessible coast can have large shipments of raw materials from overseas for manufacture. Landlocked countries will have a harder time with this avenue of development, but it’s not impossible.
At this point in the beginning of your development plan, civil security is your top priority. A lack of security increases the uncertainty of large investments. For example, if normal police protection couldn’t protect a Nike factory or a Dell IT center from anti-Western protestors, looters, or whatever else might threaten the investment, what are the odds that either of these companies comes to your country? Even if it means giving up on tight policing in less important areas, your country needs to be able to show that it can protect the places you want to attract investment to.
Assuming you’ve taken care of security to some degree, the next step in this process is to ease whatever restrictions you have on international trade. Quotas, taxes and most other disincentives to foreign investment need to go. Chances are that if your country is “developing,” there’s not much income from these revenue streams any ways, so the benefit of attracting foreign investment will far outweigh the cost of disposing of these policies.
Finally, you should attempt to join a regional trade organization (such as NAFTA, ECOWAS, or Mercosur) and as well as the WTO. Joining a trade organization is an essential step to encouraging the type of investment that is needed for a developing economy to actually start development. However, along with the issue of securing safe zones for investment and reducing trade barriers, this is just one step of many in creating a prosperous economy that literally any nation on the planet can build.