Understanding base economic dynamics for under developed and developing countries – a Zambia like case

BY Bernadette Deka Zulu (PHD Researcher)

THE aim of this week’s article is to help us understand some under-developed and developing countries’ fundamental economic challenges and problems; and how planning is vital and not limited to intervention; as a necessary condition for economic development.

We continue to witness developing countries drop the principle of laissez-faire in tackling economic problems,

Presently countries, like Zambia havebegun taking part progressively in useful development exercises and through monetary and fiscal policies are directing the bearing of economic activities.

Since sources are scarce, as is in the case of Zambia, it becomes necessary to plan the distribution of resources among various projects as well as plan their utilization in developmental projects. This makes the circle of State activity extremely tremendous. It largely incorporates keeping up with public administration.

Consequently the countries are bearing weighty obligations to guarantee fast monetary improvement especially in under-developed nations.

Vital functions & Remedies:

Organizational Changes

The organizational changes play an important role in the process of economic development. It includes the expansion of the size of market and the organization of labour market. The state can develop the means of transport and communications for expanding the size of market because private enterprise cannot be capable of undertaking such schemes.

Social and Economic Overheads

The main obstacle in the way of economic development of under-developed countries is the lack of economic overheads such as means of communications and transportations, ports, electricity irrigation etc. In industrially advanced countries, these facilities are provided by private enterprises.


It is the setting up of more industries and increase in the production that will initiate a societal change and increase in production. If Zambia attains the age of high mass consumptions, there will be more goods produced and better, quality goods left for trade.


Education plays an important role in the process of economic development. According to Myrdal, “To start on a national development programme, while leaving the population largely illiterate seems to be futile. The educational facilities provided in under-developed countries increase their geographic and occupational mobility, raising their productivity and facilitating innovations. The quality of labour is very important for economic growth.”

Agricultural Development

In under developed or developing countries, majority of people depend upon agriculture for their livelihood. Lack of irrigation and credit facilities are main hurdles in the way of economic development. If the agriculture remains backward, the other sectors of the economy cannot develop because agriculture is the basic industry and the other industries depends upon it for raw material.

Indirect Measures

In an indirect manner, the government can perform a vital function in providing the ever increasing needs of people.

Monetary Policy

A proper monetary policy helps economic and industrial development by increasing the volume of scarce resources, raising the productivity of factor of production, improving the economic and social conditions and removing the various bottlenecks in the process of economic development. In developed countries control of money supply by the government is necessary as they had ensured the full employment.

But in under developed countries the unemployment is not due to cyclical fluctuations but is primarily the result of paucity of resources to put the people to work. This can be checked by creating additional resources through capital formation. In such countries monetary policy has to be utilized as an instrument of increases capital formation and diverting investment resources into desired channels.

Fiscal Policy

Fiscal measures, through changes in government revenue and expenditure patterns have increasingly come to be regarded as a desirable as a desirable instrument of government policy in developing countries. Taxation can be used for increasing savings by restricting consumption and directing investment in promoting channels and preventing it from going into undesired lines.

The direct investment to sociably desirable channels, stimulate private investment, promote distributive justice, avoid economic fluctuations and so on. Deficit financing can help in raising the rate of capital formation in under developed countries.

Price Policy

Another important field of economic activity of government in LDC is regulation and control of prices. In the initial stage of economic development prices increase due to increased investment in the economy due to policy of deficit finance followed by the government. Hence, it is essential for the government to evolve a suitable price policy and keep the prices of essential commodities under control.

Increase in Foreign Trade

Foreign trade is there in under developed countries but the size of foreign trade in terms of value and quantity is small. The government can promote exports, facilitate the import of goods necessary for promoting and accelerating economic growth and restrict the import of luxury goods.

Foreign exchange crisis in developing countries can be checked through proper exchange control measure adopted by the government so that scarce foreign exchange resources are conserved and properly utilized.

Strengthening of Public Sector

Another vital role of the state economic development that encourages public sector for due social welfare of the common masses.

Economic Planning

To come over various problems planned process of priorities has to be followed. Today the choice is not between planning and non-planning but between different degrees of planning. Therefore government watches that the economic resources are used for socially described beneficial projects. Public finance is used to secure balanced development in different projects.

They need capital for investment but under developed countries have the scarcity of funds and funds can be raised through deficit finance also. Therefore it is the prime duty of the government to watch whether these funds are invested in proper channels and there is no wastage of resources. Moreover they also watch that deficit finance should not have any inflationary impact of the economy.

Public Debt

When government lacks internal resources, it uses external assistance to accelerate the pace of economic development of the country. In this regard government adopts certain measures.


Science and technology is a vital aspect for Zambia to improve its economy and this will call for an increase in production of goods and services. The call by the Zambian Republican President to have a ministry solely focused on science and technology, makes the burden lesser as it will help industry improve quality production and an increase in production calls for more industries to be set up.

This way, the economy now finds its place in the global frontier. It produces things that it once imported and new import demands arise. As technology develops further, new sectors emerge and accelerate as old ones level off.

Lastly, with the coming of artificial intelligence/al tech solutions, developing country led governments can focus more on science and technology as this will improve production and this will also have a trickle-down effect on  society and trade.



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