A variety of internal factors affect the economic development of third world countries. Such factors may interact with outside influences like import costs, colonialism, foreign aid, external debt and other countries' economic policies, which also have a major impact. Internal factors affecting economic development often combine to create negative cycles that third world countries have difficulty escaping. Four important factors of this type include corruption, internal conflicts, natural disasters and poor infrastructure.
Civil wars and ethnic violence impact a number of third world countries. The destruction caused by these conflicts reverses economic development, discourages tourism and investment, and interrupts factory production. Internal conflict diverts government spending to the military, away from the development of infrastructure and other efforts to improve living standards. Civil wars severely damage economies and significantly worsen poverty levels, according to The Stanley Foundation.
As in first-world nations, corruption affects many third world countries, though some have succeeded in mitigating it. Corruption decreases internal and foreign investment, while inducing the misuse of government funds. Bribery also creates barriers to economic activities, like starting a small business, according to the UNODC.
Floods, cyclones and other natural disasters have a harmful impact upon third world countries, severely affecting development. The infrastructure often resists such disasters with less success than that of developed nations. Deforestation poses a major problem in countries such as the Philippines and Ethiopia, worsening the impact of floods. Third world nations remain the most economically vulnerable to earthquakes, according to Forbes. After a natural disaster, the economies of many third world countries barely recover before the next disaster occurs.
Some third world nations possess little infrastructure, and much of what they do have is deteriorating. Limited internal funds for construction and maintenance lead to crumbling roads, power cuts, unreliable telephone service and similar problems. Wars, natural disasters and corruption contribute to this dilemma. Failing infrastructure disrupts internal and export-based commerce that requires transportation, also affecting factory output. For example, the poor condition of Indonesian seaports and roads decrease earnings and interrupt the production of manufacturers located there, according to the BBC.