Jun 5, 2020 in Economics
Economic Development in Madagascar

According to Collier, various traps may hinder the development of any country in the world. Their number is vast, thus  many countries cannot even be classified as developing because some of them are moving in a totally negative direction. The traps include the cases when some countries might be landlocked, face civil wars or lack important resources, while others have poor governance. This paper evaluates the case of Madagascar from the political, social, and economic point of view focusing on the trap it faces and possible solutions.

It is important to know that Madagascar is an island country situated in the south of Africa. The country has a rich culture and diverse flora and fauna. This means that it has considerable resources. Moreover, it is not landlocked. As a result, the major traps that the country has caught into include political instability and poor governance according to the classification of Collier’s traps.

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While the country is not landlocked, it has another disadvantage related to location. Obviously, Madagascar is far away from other countries meaning that the transport costs to reach neighboring countries are high. This fact discourages the trade between Madagascar and nearest possible partners. However, the country is still connected to the rest of the world through the sea.

The attempted coup happened in the country in 2009. During the unrest, many people were killed as the majority of the population participated in the protests against the government. Those actions were mainly motivated by the need to change the governance of the country which was characterized by high level of corruption. Unfortunately, similar incidences leave the society divided. Moreover, foreign investors are usually scared away from the countries where there is a high risk of damage to property associated with political instability. During the political disagreement, people also fail to engage in the important economic activities which adversely affect their daily lives.

Poor governance is the greatest issue that influences the economic growth of the country. Madagascar is characterized by the leaders who are self-centered and greedy. Indeed, they care mostly for themselves and want to accumulate wealth without considering the interests of local people. Besides, corruption in the country is very high. It means that foreign investors prefer not to start a business on the island. The aid that is given to the country is misappropriated. Thus, instead of stimulating the growth, the foreign aid gives advantages only to several individuals. The country leadership has not invested in the local infrastructure. Therefore, the costs of doing business in the country are very high since transport costs remain great. Undoubtedly, reforms are necessary for the country if they ensure that the local government uses the available resources wisely.

Our Process

The country also lacks important trade policies that ensure that fair trade is possible and that encourage the investors to provide required funds for local companies. For instance, the authority does not provide an appropriate framework that can guide the copyright protection in the country. Moreover, the regulations are also inefficient. Without doubt, it is vitally important to ensure that every citizen can benefit from proper trade and distribution of resources in the economy. This bitter reality, therefore, hinders the development of the country.

Various social factors have influenced the economic development of the country. In fact, they are actually influenced by the political system in the country. First, the population in the country is very small, thus there is no attractive market for investors. The sparse population means that the foreign investors find it unreasonable to invest in the country. Besides, small population means a smaller market for the company products. This fact does not stimulate the growth in the country. Additionally, the education system is very poor with high levels of illiteracy. The insufficient educational system means that the government does not provide its citizens with important skills that are necessary to extract the resources and to process them in the modern world. The high dependence on the colonial masters who manage resources and take them to their countries is a great challenge that the country has to address constantly. There is a need to ensure that people receive the quality education that equips them with the skills to survive in the changing environment and to attract local and international companies to start operations in the country.

Aid from international countries and organizations does not give advantages to people in Madagascar. The organizations, including international monetary fund, should initiate reforms in the country before they can release the funds to facilitate development. With the current level of corruption and the lack of proper legal system, funds can never increase the economy. Therefore, the international organizations should have guarantees that assure that funds are not misused in the country.

Our Benefits

Internal changes are necessary in order to boost the development of Madagascar. Thus, the changes start with the people, who need to choose good leaders and introduce fundamental reforms. If good leaders are elected, they will initiate comprehensive changes. There is also a need to improve the healthcare and, educational systems as well as increase local infrastructure. The government can also initiate legal reforms that ensure that the island is attractive for the foreign and local investments. In fact, these activities can improve economic, political, and social development.

Moreover, the country should be introduced to the external world informing that Madagascar is an eclectic place with unique traditions and outstanding nature. Obviously, various tourist attraction sites can attract foreigners to visit the country. It can stimulate the establishment of other businesses that are associated with tourism.

The foreign countries and organizations can help the country resolve current problems. Charity can start initiatives that improve healthcare as well as provide a better education for the locals. The international organizations, such as World Bank and IMF, can also increase funding in the country with stringent requirements to the leadership of the country to pass laws that promote proper utilization of funds. The measures can also control that the funds given to the local development are invested in important sectors, such as healthcare, education, and infrastructure. By providing these important services, it is obvious that the country is likely to improve the living conditions.

In conclusion, Madagascar has a great potential. However, it has been caught in the trap of poor governance where the leaders are not interested in developing the economy but choose to accumulate their wealth. The social services are very poor. It means that the people do not receive important basic services. Lack of social services, including proper education, shows that the economic sector does not have the opportunities needed to attract both local and foreign investors. Additionally, the political governance needs to ensure that corruption is eliminated so that the foreign investors gain interest in investing in the country. Furthermore, it is important that international institutions help the country to grow. However, they have to be careful while emphasizing the proper use of the resources that they provide. They should also monitor the use of funds in the country to ensure that they are not stolen. Consequently, Madagascar resembles many other countries who should overcome problems. Though, visionary leadership and practical reforms can improve the life on the island.

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