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

  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

  2. 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

  3. 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
  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

  1. How does debt influence economic progress?

    • Debt repayments cause a major drawbacks to money borrowed previously

  2. 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
    1. Lack of governance and corruption:

   

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