Capitalism and Its Struggle in Developing Countries

2718 WordsMar 21, 200911 Pages
Capitalism and its Struggle in the Developing Countries Since the development of civilization, more than 5000 years ago, some type of economic system has always been applied. Resources have been scarce and people always have had to decide how to allocate their resources in the best manner. To this day, people have tried many different systems. However, systems as feudalism and mercantilism belong to the past. During more recent times there have been two competing systems, the capitalist system of the west and the communist system of the east. But with the collapse of the communist regimes in Eastern Europe in the late 1980’s and early 1990’s there now is only one system still standing. Today there is no argument that capitalism, even if…show more content…
Also, immigrants from these countries hardly have any trouble to adapt western capitalism upon arriving here. The problem is not the lack of effort of the developing countries or any cultural differences. The problem lies elsewhere. Economic development is a complex process. In classical economical terms economic growth is defined as increases in four factors; capital, labor, human capital and technology. The objective is therefore to apply an economic policy that generates the greatest increases in these factors. There have been many different theories applying to this, but economists generally agree that economic freedom is essential. Economic freedom is a relatively vague term. But it can be defined as when it is possible to enter into voluntary agreements, which are upheld by a strong and predictable rule of law which also protects people’s private property. There have been attempts to measure economic freedom. The most ambitious is the Economic Freedom Index (EFI) which is reported every year in Economic Freedom of the World, going back as far as 1970. This research is an attempt to describe and measure different countries level of economic freedom. EFI measures 37 different categories divided into 5 groups: size of government, legal structure and security of property rights, access to sound money, freedom to exchange with foreigners and regulation of credit, labor and business. Each category is measured from zero to ten
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