Barriers to development

Question 1

what is human capital

Answer 1

the knowledge/skills/experience/abilities possessed by individuals in a population that can be used to produce economic value

Question 2

what is a human capital gap

Answer 2

the difference between the attributes of a workforce and the level required to support sustainable economic growth and development

Question 3

problems with human capital gap

Answer 3

• hinders labour productivity growth
• reduces innovation and technological progress
• holds back increases in tech progress
• can deter FDI
• reduces economic resilience to shocks

Question 4

what are weak institutions

Answer 4

when the legal, financial and political institutions are not well-established

Question 5

what are problems with weak institutions

Answer 5

• more difficult to establish property rights
• harder to access credit & finance; may have to use informal financial sector
• less say in how the economy is run; may not have a democratic vote

Question 6

what is corruption

Answer 6

the abuse of public office for financial gain - including bribery of public officials when contracts are negotiated, bribery at customs facilities, money laundering, misappropriation of aid flows, illegal tax evasion

Question 7

problems with corruption

Answer 7

• deters FDI as risk increases
• more allocative inefficiency as public resrouces are diverted for private gain
• political lobbying can sway govt decisions
• more persistent income & wealth inequality and reduced progress cutting extreme poverty
• loss of trust
• poorer human development outcomes

Question 8

what is the infrastructure gap

Answer 8

when the available infrastructure resources/ investments do not fully meet those infrastructural needs adequately

Question 9

problems with infrastructure gaps

Answer 9

• higher costs for firms - so higher prices - hits real incomes
• lower geographical mobility of labour - may lead to structural unemployment
• less attractive to FDI
• vulnerable to external shocks e.g. COVID

Question 10

what are property rights

Answer 10

legal rights to property
need to be clearly defined e.g. identifying and titling land rights, protection of intellectual property, preventing illegal poaching, having the right to start & own a business, enables use of digital identity programmes, helps prevent tragedy of commons

Question 11

effects of failure to establish property rights

Answer 11

• deters entrepeneurship
• deters R&D and innovation
• reduces investment that may boost agricultural productivity
• limits wage growth that could lead to greater tax that could be spent on development policies
• allows deforestation and depletion of natural resources