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Political Economy of Development
Globalization is the process of global integration stemming from the interchange of views, products, and other elements of culture. The developments in transportation and telecommunications have been the primary factors contributing to globalization. There are numerous advantages of such extension that contribute to the enhancement of trade and provision of services.
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Nevertheless, globalization has posed numerous challenges to the states as they attempt to cater for the increasing demand for services. The paper evaluates the political and social economy of Latin American countries and offers recommendations for policies that can be implemented to address the issues concerning globalization and its challenges.
The essence of the globalization process is the direction regional economies take to become internationalized. Foreign trade is developing as well as the global economy while transnational companies become stronger and formulate new strategies (Diego, 2002). Entire nations and separate cities now depend to a greater extent on the dynamics and performance of the global economy. Thus, the transfer of capital, information, and physical inputs regulates the patterns of production and consumption. However, different macroeconomic variations, novel rules for homegrown markets, and the disassembling of the systems of social protection benefit selected people and corporations resulting in a greater gap between the rich and the poor.
Urbanization is a major trend in Latin America and the Caribbean. The region has a population of over 500 million citizens with 70% living in towns (Cohen, 2004). Presently, LAC has 36 metropolises with populations of over 1 million.
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The municipalities in the region form a highly heterogeneous set of cities. Even within the same nation, towns differ markedly in size, location, economic and productive roles, history, culture, and associations with external environments and markets (Cohen, 2004). Overpopulation significantly affects the quality of life in the majority of the cities. Rural-urban migration is caused by the high unemployment rate which compels people to move to cities to seek casual employment.
Social and Political Economy
The primary concern in the existing reform of the state involves the shift of power from national to local governments. The aim is mainly to reduce the pressure on the state government agencies and transform the municipality designating its roles and functions in order to be able to offer better services (Diego, 2002). The region is facing some challenges with transferring decision-making, technical capacity, financial resources, and administrative self-sufficiency in a manner that ensures democratic organization of local affairs.
The issues of the cities in LAC concern generating new demands and challenges for the global community, national governments, and local communities. These matters are greater than the present administrative, technical, and financial plans and abilities for handling urban development. Such matters necessitate broadening and strengthening the capabilities of social organizations and institutions (Diego, 2002). Hence it is important to acknowledge the particular competencies and dynamics of national government, NGOs, and municipal agencies.
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Furthermore, poverty is a significant problem since it is the primary reason for overcrowding in the towns. If this issue is not addressed, all the efforts aimed at strengthening democracy will fail to bring success, and social unrest will increase (Diego, 2002). Alterations in various areas can sustain the fight against poverty comprising a pillar of support to a novel democratic approach to enhancing the living conditions of poor people in urban areas. First, there should be a shift to a democratic city management since totalitarian governments are rarely concerned with addressing the problems of the poor (Cohen, 2004). Instead, they reproduce a more intense and generalized kind of poverty that is evident from the increasing social and spatial segregation in the towns. This segregation perpetuates differential access to such resources as land and housing. To reverse these trends, more than the right to elect government representatives is required. In the LAC region, elections have not provided the opportunity for the low-income earners to decide on the government representatives (Diego, 2002). The duty to democratize society and manage cities lies with popular establishments given that government values their self-sufficiency and dynamics. Nevertheless, democratic management at the local level necessitates some complementarity on the part of state institutions.
Strong social management is indispensable to the democratic management of the cities. Frequently, low-income groups start expending considerable efforts to improve their economic conditions. Nevertheless, these processes often promote democratization within society. The chances of this occurring are enhanced when local authorities and popular organizations develop mutual gratitude and respect for the other area of concern. Instituting a legal agenda for endorsing and protecting the existence and functioning of local CSOs, advancing the political will within local authorities to work with them, and facilitating access for CSOs to partake in the decision-making will expedite the process (Diego, 2002). Democratization presupposes creating social dynamics from the base of society and to the national level. However, local-level democracy cannot be established before the same happens at the national level.
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Recent experiences in LAC demonstrate that local societies and towns frequently remain under the influence of traditional local elites and national authorities even after some forms of decentralization have been implemented. From a community perspective, it is vital that different local groups are capable of articulating their demands and outlining alternative approaches to their problems. The required type of decentralization is the one that delegates power, verdicts, and resources (Diego, 2002). For instance, democratic decentralization entails rethinking external debt, particularly debt contracted by local governments to provide housing and other amenities. If new loans are required due to the lack of local financial resources, they should be based on the local and national priorities and avoid social dislocation to the majority of the poor population. Decentralization can fragment the initiatives of the citizens or local authorities.
The ability of the poor to access land, housing, and other urban services as well as acquire better living conditions depends on attaining an optimum balance among three dependent social players: the state, the community-based actors, and the private sector. The state is societys controlling agent (Diego, 2002). Therefore, it has to be strong enough to manage its economy and international relations, guarantee social peace, and offer basic amenities while permitting broad participation of all social groups in the state structures and operations. The most important role of the state concerns strengthening democracy. The private sector’s principal aim is to obtain profits. Its significance to the national economy cannot be undervalued. However, the operations of the private sector have undermined the ability of the state to mitigate unequal distribution of wealth in the recent years. Current trends witness the state increasingly adopting the private sectors orientation toward profitability as a criterion for public investment which has resulted in suspending services to the majority.
Problems Resulting from Social and Political Policies
The LAC region has a high rate of crime, the main types of which include kidnapping, assault, and gang violence. Moreover, the control strategies for these occurrences are ineffective. For example, numerous police officers are involved in corruption. This fact discourages people from reporting crimes. This issue is an economic problem since it deters investors from conducting their business (Cohen, 2004). Security is one of the central aspects that investors deliberate on before investing in an overseas nation because they want a guarantee of the safety of their assets. Thus, a high crime rate results in the decrease in the number of potential investors and loss of present investors.
When there are fewer investors, the amount of FDI in the region reduces. Consequently, the government fails to obtain essential funds that it needs to improve infrastructure and provide services to the inhabitants (Diego, 2002). Furthermore, the unemployment rate increases significantly due to foreign investors frequently creating large corporations that employ many local citizens. The residents can afford a good standard of living owing to these jobs. Thus, the investors cutting their investments leads to the loss of jobs and, consequently, lower standards of living.
In addition, crime results in locals losing their property and their business as well as their lives in some cases. These citizens are workers who contribute to economy greatly. Moreover, they are parents to many dependent children. When they are killed because of the high crime rates, they leave behind children who cannot provide for themselves. Thus, the economy is negatively affected by the reduced productivity (Cohen, 2004).
The municipalities are in charge of the schools in the areas. This fact results in a situation where the poorer areas receive education of inferior quality while the richer areas are provided with first-class education. The students in the poor areas cannot access the services and resources that the students in the rich regions have. Since a huge number of students come from low-income families, the total number of pupils accessing poor education is bigger compared to the students receiving good education (Diego, 2002). Furthermore, child labor is a widespread issue for low-income families. Poor families remove their children from school and send them to work and bring income to the household. Children drop out of school at the age of 15 to begin working.
Inadequate education results in a population of unskilled labor. This population has a minimal contribution to the economy of the region. As a result, technical knowledge in LAC is low owing to the management of educational facilities. Due to the unskilled labor, the region is compelled to outsource labor from other nations (Cohen, 2004). The outsourced individuals work in the region and send money back to their home nations. Consequently, the citizens in LAC are not be able to afford basic commodities and services. This outcome is a major hindrance to the economy. Nevertheless, when business transactions do not occur, the economy is affected negatively as well.
Furthermore, LAC has a severe housing problem. For instance, in Brazil, there is a deficit of around 7 million homes. Also, over 20% of the Brazilian population resides in scanty houses known as favelas. These favelas have appeared in the major cities, particularly Sao Paulo and Rio. The growth of these structures has been enhanced by the rural-urban migration taking place within the country. The majority of the population has opted to move from the rural regions to the urban ones in search of a better life. Presently, 8% of the population live in the urban areas (Cohen, 2004). It created an unfavorable situation in the major cities: favelas are unhygienic and lack access to clean water. In addition, diseases that people acquire from favelas decrease productivity. This issue has a considerable negative impact on the economy of Brazil. Urban-rural migration involves people migrating from the countryside to towns. This migration causes the available labor in the rural area to decrease.
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Thus, the agricultural produce of the country also reduces. Subsequently, the money earned by the nation from the export of agricultural produce drops (Cohen, 2004). Moreover, the citizens leaving the rural areas and settling in the urban regions do not find employment. They later become a burden since they do not contribute to the economy.
Investing in Education
Investing in education will result in the enhancement of economy since people will obtain good education which would enable them to acquire well-paid jobs. A recent study indicated that rich states comprised of individuals with good jobs. The income of the skilled staff is significantly higher compared to that of the unskilled workers. This policy will prevent the government from being compelled to outsource labor. Instead, skilled individuals can be outsourced to the overseas countries, thus increasing the amount of money in their own nation. Moreover, high-quality education produces professional workforce that is resourceful in innovating products to be exported to other countries. The process of providing quality education in LAC has to start by setting regulations against child labor.
The governments should set strict rules on all criminal activities in the region. Such policy would discourage petty offenders from committing crimes. Even minor occurrences of crime may deter potential investors. Thus, the governments should take necessary measures to ensure that the investors feel that their assets are safe in the region.
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For example, the majority of crimes in the region happen in major cities. Therefore, the government should increase security in these areas, which can be achieved by providing police officers who constantly patrol the towns with necessary resources. Public campaigns should then be held to inform the citizens of the consequences of engaging in criminal activities. When the residents know the penalties, they are likely to make better choices and avoid illegal activities.
Regulating Rural-Urban Migration
Rapid population growth has resulted in the congestion of the major towns. This issue can be addressed by supporting agriculture. The governments in the region should provide farm supplements, such as tools and manure, to the citizens living in rural areas. It will encourage the large population of unemployed people in the cities to return to the rural areas to engage in agriculture. Then, the governments should purchase the agricultural produce from the farmers at reasonable prices. As a result, it would help solve the overcrowding problem that is apparent in the large cities, such as Sao Paulo and Rio. Furthermore, it will ensure that the region has adequate food to provide for the entire population.
The quality of peoples life decreases when the urban region deteriorates. Consequently, low-income households are significantly affected. Therefore, to improve the condition of the poor, an integrated approach is needed. This strategy should include building and sustaining equitable democratic cities that provide adequate living conditions for all citizens. In fact, collaboration between the state, the private sector, and the community-based organizations results in a favorable democratic city. This collaboration would ensure that citizens gain equal access to basic resources regardless of their background. As a result, democracy in the region would be intensified since the citizens would feel that there is equity in the provision of services. In turn, significant social and political development will occur.
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