Type of paper: Research Paper

Topic: Development, Taxes, Countries, Economics, Income, Business, Education, Social Issues

Pages: 5

Words: 1375

Published: 2020/11/30

Summary description of problems in development economics in low-income country

Reference of the review to the relevant literature
B. Ideas that lays the basis for the problems in development economics in low-income countries
Problem of Unemployment
Problem of poor health and education
Problem of inadequate infrastructure
Problem of fair trade and imposed taxes
Problem of slow integration into the global economy
N/b substantiation of the ideas with data and the writings of other authors
C. Conclusion

What the government needs to do to mitigate the problems that face low-income countries in terms of economic development.

Steps that NGO interested in helping the low-income countries to improve their income
There are three groups of economies namely high income, middle income and low income. High-income economies are associated with developed countries; middle income to half way developed and low income to developing countries. The research paper tries to explain some of the problems in development economics in low-income countries. There are more than 30countries, which fall under the group of low income. The paper uses Kenya a country in Sub-Saharan African as an example of countries faced with development challenges and the key issues to the problem of development economies in developing countries are the problem of unemployment, problem of poor education and health, slow integration to globalization, unfair trade, and inadequate infrastructure.
A low-income country is a country that leaves on less than $1 per day as rated by the World Bank. This kind of country lives along the poverty line and its citizens cannot afford basic needs like food and countries under this group of economy are as well termed as developing countries. Despite their efforts to develop their economies, these countries faces problems of unemployment and their infrastructure is inadequate which hinders business development . These nations are characterized by poor health and sometimes hard to access health centers and the ones available are not equipped with right facilities. Low-income countries as well respond slowly to global economies hence left behind in terms of the world markets. As well, political structures of these nations do not favor the producer of agricultural produce as certified in the fair trade. To the citizens of these countries, the essence of fair trade is just but a dream to them. In addressing the issue of how taxes affect the development of low-income countries, we can refer the argument to the optimal taxation literature. The discussion on how the local government affects economic development refers to the impact of local government in economic development.

Unemployment as a problem of development economics

Unemployment arises when the requirement for jobs is high than what than what the economy of that country can offer. In Kenya, the country of study in this paper experience high levels of unemployment and there is more willing labor force in the market, but there are no jobs. Current statics shows that there are more graduates in the market in search of jobs. Unemployment hinders economic development of any nation and for that matter, Kenyan people can barely lead a comfortable life due to an unemployment rate . It is from employment that most people get income to invest, as not all are lucky to inherit or come up with innovations to create jobs. Unemployment result in many ways but the one in Kenya is due to more capital channeled to developing industries than addressing the real issue of unemployment. In comparing the groups, studies shows that low-income countries experience high levels of unemployment. Middle-income group experience moderate level of unemployment, which they can manage, and high-income countries have maintained their unemployment levels adequately.
Problem of poor health and education
Health and education are primary influencers to any economic development and improved education systems enhance citizens to make wise economic steps. In conjunction with training and health, Kenya faces a significant challenge when it comes to these sectors. There are some parts of Kenya, where children have no access to education. In other places, they travel long distances to get to school and many a time these schools have essential facilities like enough classrooms. Research statistics shows that 2 out of 10 students can barely complete elementary education and inadequate, poor education is a clear indication of continued poverty in the future. As the kids grow, they do not have the necessary knowledge for them to contribute wisely to the economy of Kenya . Health as well affects the economy in a manner that healthy people have energy to work positively . This kind of aspect makes the citizens productive hence improving the economy of that country and current data indicates that Kenya as a developing country faces health challenges. Most people and more especially children do not access better health facilities and children end up growing with poor health status, which later affect their contribution towards the economy. In comparing both health and education status across the economic groups, developing countries are the poorest. Middle-income countries have improved education and health system. However, they are not entirely developed. Finally, developed countries have advanced education and health system.


Infrastructure affects economic status of nations. For instance, Kenyan infrastructure is inadequate compared to infrastructures of middle-income countries and tat of high-income countries like UK. Infrastructure hinders business performance due to failure of goods and services delivery and Kenyan communication type is unreliable making it another problem in development of the economy. Data indicates that more than 10% of the Kenyan places have no network coverage. Another significant percentage of the Kenyan area has poorly weathered roads.

Fair trade and taxes

Fair trade is the essence of selling agricultural products of developing countries in developed countries to promote the producers. Fair trade promotes activities of producers and workers in those agricultural places. However, this has not been the case as the producers and employees get little than what is expected. For instance, Kenya is known for tea in export. Tea farmers get reduced pay, which leaves them with nothing when they deduct the cost of producing tea. Studies done indicates that tea farmers live in poor houses, they cannot afford to pay school fees for their kids and more alarming the tea they have planted cannot feed them.
Further, some studies and observations indicate that most farmers are resolving to other crops than tea. It is a clear indication that failure of fair trade to serve the real purpose that, it is meant to serve is another problem in economic development. Kenyan farmers cannot develop but instead they continue to enrich organizational officials who lead trade organization. In comparing the three groups of economies, developing countries fair trade does not benefit the target group that is intended to help. Middle developed countries benefits from fair trade moderately while developed countries develop from the trade the most. Imposition of taxes affects business import and export. High imposition of taxes in Kenya has affected its business deterring people from penetrating into the market . Additionally taxes on export affects people like tea farmers as they end up earning very little and it affects their living standards making farmers live below the poverty line.

Slow integration to global markets

In terms of penetrating into the world market Kenya that is a developing country cannot compare itself with the middle developed countries like south from the same continent. It cannot either compare itself with developed countries like U.S. it takes high levels of technology and improved infrastructure to mention some to enable a country to quickly, penetrate the global market. Kenya has a problem of infrastructure, which impairs it from rapidly penetrating into the world market. Kenya is also lagging much behind in terms of technology that contributes to its slow integration in terms of globalization.


Kenya is a low-income country that must work if it wants to move to the next stage, which is middle-income earner and it lags behind in almost all aspects the affects the development of any economy. Both the government and any interested parties like NGOs need to address the critical issues that are hindering the Kenyan economy. For instance, all the problems discussed above and many others not discussed need to be addressed for the development of the Kenyan economy. There is an urgent need for attention by the Kenyan government in dealing with unemployment. The government needs to either change the education system that develops students to be job makers rather than job seekers. The government of Kenya as well needs to ensure that every Kenyan child is entitled to elementary education and that the kind of education, equally distributed to all parts of the nation. Children should not travel long distance in search of schools but instead avail schools everywhere. The Kenyan government and other interested parties like NGOs should ensure that health facilities are availed to Kenyan citizens in the attempt of boosting economic development. To motivate business and export, the government needs to reduce taxes to stimulate business people and to enable key producers of agricultural products to benefit from what they produce. The government also needs to intervene and ensure that trade organizations are fair to farmers, and they do not exploit them. Finally, to develop economies of Kenya, the Kenyan government, and other interested parties need to improve Kenyan infrastructure and technology and will improve the Kenyan integration to the global economy. Like Kenya, other developing countries faced with more or less the same problems in developing economies. They can apply same policies as they try to improve their economic status to move to the next economic group.

Works Cited

Baffoe-Bonnie, John, and Mohammed Khayum. Contemporary Economic Issues in Developing Countries. Westport, Conn: Praeger, 2003. Print
Eshag, Éprime. Fiscal and Monetary Policies and Problems in Developing Countries. Cambridge u.a: Cambridge Univ. Pr, 2003. Print
Tanzi, Vito, and Howell Zee. Tax Policy for Developing Countries. Washington, DC: IMF, 2001. Print
THE JOURNAL OF ECONOMIC ISSUES (ISSN: 0021-3624) is published in March, June, September, and December and is sponsored by the Association for Evolutionary Economics.

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