Examine the problems of newly developing economies in today's world.

Historians have observed that the United States of America was the best suited nation in history to adopt a free market, capitalist economy. Implicit in this observation is the assumption that there are conditions that make democratization of both the political and economic systems of a nation possible. Newly developing economies around the world — ranging from poverty-stricken third world nations to nations like Russia that are transitioning from a command economy to a free market economy — struggle when these conditions are not present.

For a free, capitalistic economy to take hold, there must be a broad understanding and acceptance of individual property rights. The Declaration of Independence, inspired heavily by John Locke, makes it clear that, at least in the American context, government exists to serve the individual and to protect life, liberty, and the ability to pursue happiness (or, as Locke would have it, own property). In many nations around the globe, there is not a strong tradition of individual rights or private property ownership. Because free market capitalism is fundamentally rooted in the free, largely unregulated economic decisions of individual property owners, the lack of such a tradition is often fatal to free market reforms. In Russia, for example, communist government command and control has been replaced by mafia command and control. Capitalism has yet to send down deep roots and flourish.

Additionally, a free market economy must exist in the context of a stable political system. People must be free to wake up in the morning, go to work, and interact with others, and make economic exchanges without undue concern about the stability of the laws and regulations that govern their business transactions. In many emerging democratic/capitalist economies, corruption, nepotism, favoritism, and political instability erode public trust and undermine the functioning of a free market economy. Stable democratic institutions, elections, and legal systems are necessary conditions for democratic, free market development.

Cultural and social factors also impinge on the success of economic and political progress in developing nations. For example, if there is significant racial, ethnic, or religious unrest, normal business transactions and economic exchanges are not possible. If the security of a nation is threatened by hostile neighbors, the market is similarly unsettled. Socioeconomic factors such as poverty, mortality rates, homelessness, malnutrition, and disease can further impede the development of a stable democratic, free market society.

In sum, there are basic levels of political, economic, social, and cultural stability that are required before nations can successfully make the transition to democratic, free market societies. It's not easy for a government to make the transition. Government leaders must provide as much stability as possible while intervening in the economy only when absolutely necessary. Citizens must assume greater responsibility for their own economic decisions. A basic understanding of democratic processes and a willingness to participate in them is also essential. As the United States reaches out and offers assistance to developing nations, its efforts are focused on helping them establish democratic and free market processes.