As one of the most impoverished nations in the world, one of the last authoritarian dictatorships on earth, and only recently in contact with the outside world, Pooristan needs to implement effective strategies for becoming more developed. It needs to focus on trade liberalization, emphasize the importance of property, encourage the growth of small businesses, allow the KIEOs a well controlled role in helping with development, and provide opportunities for certain types of foreign direct investment (FDI). Although shock therapy has been proposed for Pooristan, it is not recommended.
Pooristan needs to move toward greater trade liberalization. As Easterly (2009, p. 81) points out, government restriction of trade only pushes poor countries more deeply into poverty, and "Private entrepreneurs are far better than the government at picking industries that can be winners in the global economy." Liberalization needs to be undertaken with caution and on a phased basis, however. Pooristan's people are not accustomed to a free trade environment and need some training and guidance to help them make the most of free trade without being victimized by it. Bergsten (1996, p. 271) notes that there is an "equitable" asymmetry between the rich and poor countries in terms of their relative levels of liberalization, due to the rich countries' willingness to help the poor ones develop growth strategies oriented outwardly. This approach allows the poor countries access to the markets that the rich and already liberalized countries are part of and gives them a chance to catch up over a period of time (Bergsten, 1996, p. 271).
Property ownership is another vital component of Pooristan's development strategy. As de Soto (2005, p. 480) states, "The transition from feudalism, patronal, or tribalism to a market economy begins with property." Although Marx decried the possession of property as being too complex for the common ...