Barriers To Development

Question 1

State + explain the micro barriers to development.

Answer 1

• Low Productivity: massive issue in developing countries - keeps incomes low, keeps C high for firms - not very competitive internationally.
• Poor Education, Health, + Infrastructure: could be due to low incomes - can’t afford to access education + health + lack of gov funding - keeps productivity + incomes low. Public goods need funding - if not funded - detracts FDI, reduces competitiveness, + reduce accessibility of hospitals, schools, etc.
• Volatile Commodity Prices: if P are falling - impact on producer revenue + livelihoods.
• Resource Depletion: if resources are depleted are major X / sources of growth.
• Power Of MNCs: if developing country attracts FDI, what influence do MNCs have on policy making - if policies are in favour of companies + not in interest of development - major barrier to development.

Question 2

State + explain the macro barriers to development.

Answer 2

• Protectionism Abroad: issue if country is X dominant.
• Volatile Exchange Rate: keeps trade , aid + FDI away.
• Corrupt Government: massive issue in how they use tax rev / how efficient they are with gov policy.
• Low Savings + Investment: low S means lack of I - hinders economic growth + development outcomes.
• Unbalanced Growth: overspecialisation - if there’s a shock / fall in international P of commodity - can lead to shock recession - major barrier to sustained ,continuous development outcomes.