4.9 Barriers to economic growth Flashcards
What is a poverty trap/cycle
any linked combination of barriers to growth and development that forms a cycle that is self-perpetuating unless the circle can be broken
Give an example of a poverty trap
when incomes are low, people do not have income to save after covering their basic needs
low savings imply low levels of investment in physical, human and natural capital, which therefore results in low productivity of labour and land. Low labour productivity produced low or no income growth and so incomes are stuck at low level once again
How is poverty often transmitted
from generation to generation
Poverty traps often result in:
intergenerational poverty
Which type of feedback loop is connected with poverty traps/cycles?
positive feedback loop
What is infrastructure
the large-scale physical capital needed fro economic activity to take place
it is often provided by governments but not always
What type of good is infrastructure
merit good
has positive externalities
what happens when infrastructure is poor or lacking entirely
it can become a barrier to development
Examples of transport
roads, railways, airports, public transport
examples of public services
police
waste collection
education
health service
examples of communication infrastructure
radio and television
internet access
examples of utilities
electricity
gas
drinking water
sanitation services
What are examples of infrastructure
tranport
utilities
communication
public services
what does infrastructure allow for
facilitates economic activity
What happens if infrastructure is poor quality
supply chains are slow or disrupted, increasing the costs of production and firms may not even be able to get the resources they need to make goods and services
it indirectly plays a role in the material dimension of human development, by increasing economic growth, improving incomes and increasing the ability to purchase goods and services
