factors influencing growth and development essays

Essay chain: poor infrastructure

Poor roads, ports, energy and communications raise firms’ transport and production costs, making domestic firms less competitive. Output, exports and inward investment are lower, productivity stays weak, LRAS grows more slowly, and wages, profits and tax revenue stay lower, limiting development spending.

Diagram for poor infrastructure (Paper 2)

Use AD-AS. Poor infrastructure can shift SRAS and LRAS left because costs rise and productive capacity is lower. If writing it as an improvement, show SRAS and LRAS shifting right.

Diagram for poor infrastructure (Paper 3 micro)

Use a cost-revenue diagram for a firm. Poor infrastructure raises transport and energy costs, so AC and MC shift up, output falls and profit falls.

Evaluation for poor infrastructure

The impact depends on governance, funding and time lags. Infrastructure projects may be delayed, poorly targeted or affected by corruption, so the gains may be smaller than expected.

Essay chain: primary product dependency and price volatility

If a country relies heavily on primary exports, export earnings become unstable because commodity prices are volatile. This makes business confidence and government revenue unstable, reduces investment, and can create a shortage of foreign currency, making it harder to import capital goods, raw materials and medicines, which constrains development.

Diagram for primary product dependency and price volatility (Paper 2)

Use AD-AS. A fall in export revenue shifts AD left, and weaker investment and fewer capital-goods imports reduce LRAS growth.

Diagram for primary product dependency and price volatility (Paper 3)

Best used as a macro point rather than a micro cost-revenue point. If needed, you can mention a primary product market with inelastic demand and supply causing large price swings.

Evaluation for primary product dependency and price volatility

The problem is smaller if the country can diversify exports, process raw materials domestically, use buffer stocks, or build foreign exchange reserves.