Rich countries are getting richer while poor countries are getting poorer. What is the cause of this? What could be done to solve this problem? (common question)

Affluent

states

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continue to expand their national treasury,

whereas

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poor

countries

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become more impoverished.

This

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happens because wealthy

states

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are prone to have valuable resources and sell them abroad for a decent amount of

money

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,

while

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poor

states

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have to survive by buying oil, gas and coal from wealthy

ones

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.

Moreover

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, there is a

trade

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disbalance usually observed between affluent

countries

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and impoverished

ones

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, where the former tend to

import

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cheap labour and export valuable and costly

goods

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to the latter. The situation can be solved by expanding the manufacturing abilities of the impoverished and supporting them through foreign direct investments from the rich.

Firstly

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, the land of the poor regions is resource empty,

therefore

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they have to

import

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valuable resources from other rich regions in order to meet the needs and satisfy the demands of the local market. It creates a condition, where the unprivileged

ones

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rely on the resources that are coming from abroad,

thus

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they lose a decent amount of

money

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on the

import

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.

Consequently

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, these

countries

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experience

money

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deficiency for infrastructure development and support of local businesses, because government expenditure

mostly

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allocated to other needs.

Secondly

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, because of the hard economic conditions and lack of industrialization among the unprivileged, people become the only valuable asset poor

states

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can export.

Therefore

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, affluent

countries

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receive cheap labour and export expensive

goods

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such

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as cars, mobile phones and technologies in turn.

This

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establishes a

trade

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disbalance, which brings more

money

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to the wealthy

ones

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,

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apply

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and makes the unprivileged poorer. In order to solve these two problems it is required to expand the producing abilities of the less privileged. It can be reached by incorporating foreign direct investments and official development assistance from the international community. By investing in the local infrastructure and industry, the international community can achieve notable improvements in the economy of

the

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underdeveloped economies.

Therefore

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, step by step domestic production will increase, and

thus

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trade

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balance will be established. In conclusion, excessive

import

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from affluent

states

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creates a dependency of the less developed economies on imported

goods

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and raw materials.

Hence

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, they purchase these

goods

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, there is no domestic production which only weakens their conditions. Through the assistance from international community by investing

money

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in underdeveloped

states

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the

trade

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balance and enhanced industry can be achieved.