Developing nations lack the technological developments which are necessary to compete in international markets. Most developed countries that use such technologies are able to produce more elaborated goods (hence more expensive) at a much lower cost and therefore gather the profits from international trade.
On the other hand, developing nations where wage levels are low and where institutions are weak become an attractive destination for corporations that perform outsourcing. Outsourcing consists on a company hiring another one in order to perform a certain task. If a corporation hires a company in a developing country, for example to perform certain stages of its production process, it can profit for the lower labor costs and the lack of regulation and taxation system that emerges from the lack of strong institutions. This outsourcing contract allows the corporation of producting at a lower cost than before and to become more competitive in the international markets.
In 1865 President Andrew Johnson implemented a plan of Reconstruction that gave the white South a free hand in regulating the transition from slavery to freedom and offered no role to blacks in the politics of the South.
