Ch 30 - Barriers to Development

Debt repayments

Debt repayments

________ cause a major drawbacks to money borrowed previously.

Capital fight

________: is the movement of large sums of money out of a country as a reaction to political or economic instability.

High income inequality

________ can be a barrier to growth and development for a number of reasons.

Poverty trap

________ (poverty cycles): any linked combination of barriers to growth and development that forms a circle, thus self- perpetuating unless the circle can be broken.

Price elasticity of demand

________ for commodities and price elasticity of supply commodities to be relatively inelastic.

Corruption

dishonest exploitation of power for personal gain

landlocked countries

those surrounded by other countries with borders, trade less and have slower growth rate

ineffective taxation structure

tax revenue provides governments with means of finance

lack of good governance:

corruption, political instability, unequal political power

political barriers to development:

• legal systems and property rights

• right to own assets

• right to sell, benefit from, and establish assets

social barriers to development:

• ineffective tax structure

• banking system (rival banks in different countries)

ineffective tax structure:

tax revenue provides governments with means of finance

Means of development

is a process that creates growth, progress, positive change or the addition of physical, economic, environmental, social and demographic components.

Poverty trap (poverty cycles)

any linked combination of barriers to growth and development that forms a circle, thus self-perpetuating unless the circle can be broken

Capital fight

is the movement of large sums of money out of a country as a reaction to political or economic instability