International economic development is the study of the process by which developing countries may achieve sustainable development. This process involves policies to improve the human resources, productivity and infrastructure of a country and create an environment of political stability. Economic development involves improved education, sanitation, health care, housing, water, sewage and transport within a stable government environment that encourages foreign investment. Economic development may be encouraged by suitable international trade policies and agreements that reduce barriers to exports from developing countries. International economic development is not necessarily the same as economic growth, which in itself may not lead to sustainable development but may have harmful consequences for the environment and for sections of a population.
Efforts to achieve international economic development include looking at the type of policies that may bring about a sustainable improvement in the economy of a developing country while recognizing that different countries may require different policies. Not all developing countries are in the same stage of development and they differ greatly in terms of their land area, natural resources, population, geographical position, infrastructure and political systems. Within the general framework of international economic development, each developing country must formulate its own specific policies to achieve sustainable development.
Developing countries generally need to develop their legal and financial institutional framework. An efficient banking system must be built to ensure that savings are appropriately invested and that businesses are able to obtain funding for new projects. Without an efficient banking system, capital will move outside the country and an unofficial financial market will grow, charging punitive interest rates for business or personal loans. A strong legal system must be constructed to enforce contracts and protect property rights and business assets. The government must be able to raise taxes and administer laws in an atmosphere free of corruption.
Infrastructure must be developed to improve the standard of living and assist trade. There must be adequate utilities such as electricity and water; public services such as education, health and policing; satisfactory postal and telecommunications services; and a good transport infrastructure including roads, railways, seaports and airports. The infrastructure is an essential basis for the improvement of the quality of human capital through increased health, education and training.
International economic development requires an international trading environment in which developing countries may engage in trade without facing unnecessary barriers. International agreements and discussions in organizations such as the World Trade Organization (WTO) have made some progress in reducing tariff barriers to developing countries' exports but still are working as of 2011 to reduce subsidies within industrialized countries to industries such as agriculture, which prevent competition from developing countries' products. Debate continues on the extent to which developing countries may need to protect their emerging industries by means of tariff barriers to foreign imports.