Knowt
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
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
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
Dependence of primary sector in relation to 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
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
How does debt influence economic progress?
Debt repayments cause a major drawbacks to money borrowed previously
Political and social barriers to development:
Legal systems and property rights
Right to own assets
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
Lack of governance and corruption:
corruption: dishonest exploitation of power for personal gain
political instability
unequal political power or status