Ch 30 - Barriers to Development 

  • 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

    • High income inequality can be a barrier to growth and development for a number of reasons
    • Low level of savings, low investments = low growth

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  1. How does a lack of infrastructure and tech hinder economic progress?
    • Lack of access to infrastructure:
      • Transport
      • Public utilities and services
      • Communication services
    • Lack of appropriate technology
      • Tech appropriate to use with existing factor endowments

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  1. How does low human capital affect economic progress?

    • Lack of access to education

    • Improve role of women in society

    • Improve levels of health

    • Lack of access to healthcare

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  2. Dependence of primary sector in relation to economic progress:

    economic progress

  • If a country is dependent on a narrow range of exports, they will face a great vulnerability and uncertainty
  • Price elasticity of demand for commodities and price elasticity of supply commodities to be relatively inelastic

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

    a. Debt repayments cause a major drawbacks to money borrowed previously

    b. Landlocked countries trade less and have slower growth rate than countries that have coasts

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  2. How does debt influence economic progress?

    • Debt repayments cause a major drawbacks to money borrowed previously

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  3. Political and social barriers to development:

    1. Legal systems and property rights

    2. Right to own assets

    3. Right to establish use of assets, benefit from assets, selling of assets

      • Ineffective tax structure (tax revenue provides governments with means of finance
      • Banking system (most developing countries have dual finance markets

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  4. Lack of governance and corruption:

    1. corruption: dishonest exploitation of power for personal gain
    2. political instability
    3. unequal political power or status

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