4.9 Economic barriers DRC

Question 1

Econ barrier 1:

Limited access to infrastructure and appropriate technology

Answer 1

Infrastructure allows economic growth to occur in a country as it allows for the distribution and production of
goods and services. Additionally infrastructure allows for trades to take place as imports and exports can
travel in and out the country.

DRC:
Railway passengers carried have fallen significantly from their peak in 2001. This is due to the low
Maintenance and quality of the railway.

Question 2

Econ barrier 2:

Low levels of human capital: limited access to education and health care

Answer 2

The improvement in human capital results in higher skilled labour, therefore the quality of the FOPs (labour) in the economy increases, causing economic growth. Low levels of human capital are linked to low innovation and productivity, and thus limit economic growth.

DRC:
Children enrolled in primary schools increased from 5.5m in 2002 to 13.5m in 2014 (unesco)

Question 3

Econ barrier 3:

Informal Economy

Answer 3

Informal firms do not contribute to taxes and are usually small and unproductive due to their informal nature. This leads to lower quality products being provided in the economy. The lack of regulation also leads to goods of an illicit nature being sold which may harm the image of the country and discourage countries from becoming trading partners.

DRC:
Informal economies account for between 81.5% and 97.5% of the Congolese Economy.

Question 4

Econ barrier 4:

Indebtedness

Answer 4

Debt is a barrier to economic growth as it is an opportunity cost to the government: invest or pay back debt?
Furthermore, Moody’s credit rating for the DRC is B3 (highly speculative), which means any potential lenders will most likely charge high interest rates.

Debt-to-GDP
2017: 19.3%
2020: 12.7%
–> Falling! = good!

Question 5

Econ barrier 5:

Endemic diseases

Answer 5

Malaria affects the productivity of labour as employees will not be able to contribute to the economy when injured. Over 25 million cases of malaria harms the ability of the economy to produce at full capacity. The deaths caused by disease also make the location unsuitable to foreigners who may have expertise and skills not in the current labour force.

DRC:
The Democratic Republic of Congo (DRC) has the second highest number of malaria cases and deaths globally.
–> unproductive labor force

Question 6

What are some examples of economic barriers?

Answer 6

1. Limited access to infrastructure and appropriate technology
2. Low levels of human capital (education)
3. Informal economy
4. Indebtedness
5. Endemic diseases

Question 7

What is an example of a social barrier?

Answer 7

Corruption
According to the Corruption Perception Index, the DRC is the 169th most corrupt country in the world.

VERY Corrupt

1980-2000
Corruption has lead to a loss of 15.5 billion USD
–> could have been used to fund debt…