, OBSTACLES TO DEVELOPMENT
savings provide funds that can be borrowed by firms for investment
·
purposes
Xinvestment X
productivity X growth
·
>
-
Harrod-Domar model
·
of
growth depends on O proportion of national income is saved
↳
economy's rate
②
proportion of investment undertaken
create
poverty trap
·
"
the
poor are unable to sacrifice current
consumption
↳ limits funds for investment
making development difficult
:
trapping countries in poverty
focusing on one product/one sector of the economy
·
-
often primary products
↳
Malawi-sale of tobacco leaves
↳
oil 190 %
Republic on Congo exporte 60% GDP)
-
volatile
prices -
·
>
↳ >
uncertain income sharpt in export income
risk of
higher trade deficit
↳
deter investment
X sufficient financial
capital to engage in investment
·
O low
reasons
growth
·
:
② lack of savings
③ debts
① absence of credit markets
discourages both lenders + borrowers
↳
↳
extremely high risks associated with lending in developing countries
>
of micro-finance
-
importance
transport networks
water telecommunications
·
energy power
,
, , ,
strong correlation between country's development stage and quality of road network
·
poor infrastructure
- "
supply costs uncompetitive labour mobility
·
, -
when rainfall less than
eg. India's irrigation system unable cope expected
to
·
↳
difficult to sustain food
production
, OBSTACLES TO DEVELOPMENT
wealthy countries subsidise farmers
·
undermining market access for some of the world's poorest producers
↳
US farmers are subsidised to
produce more cotton
·
↳
Inglobal prices
·
tariff/non-tariff barriers
↳
stopping developing countries from moving into the export of higher value added
products
how authorities
manage scarce resources to
improve economic outcomes &
living standards
high levels of corruption will winder development
*
↳
inhibit inward investment
domestic businesses will
-
>
invest overseas
stable & effective framework to collect taxes
·
legal system needs to
protect private property rights
·
destruction of
physical capital
·
diversion of labour from
production to fighting
·
death of labour
·
resources
diversion of investment into
military capital
·
loss of confidence
deterring investment
·
shortage of human capital
·
·
education quality is poor
US World
eg university enrolment Africa average
·
in
7 % VS30%
lose limited skilled workforce to other countries
·
↳
brain drain
reliant
imports
·
on
↳
susceptible to price increases
↳
pushes up its import bill
MX difference
might have to be covered by foreign borrowing (external debt
·
,
inflow of
or reliance on
capital investment from overseas multinationals
has balance of
eg Ethiopia persistentf large payments deficit
·
a
savings provide funds that can be borrowed by firms for investment
·
purposes
Xinvestment X
productivity X growth
·
>
-
Harrod-Domar model
·
of
growth depends on O proportion of national income is saved
↳
economy's rate
②
proportion of investment undertaken
create
poverty trap
·
"
the
poor are unable to sacrifice current
consumption
↳ limits funds for investment
making development difficult
:
trapping countries in poverty
focusing on one product/one sector of the economy
·
-
often primary products
↳
Malawi-sale of tobacco leaves
↳
oil 190 %
Republic on Congo exporte 60% GDP)
-
volatile
prices -
·
>
↳ >
uncertain income sharpt in export income
risk of
higher trade deficit
↳
deter investment
X sufficient financial
capital to engage in investment
·
O low
reasons
growth
·
:
② lack of savings
③ debts
① absence of credit markets
discourages both lenders + borrowers
↳
↳
extremely high risks associated with lending in developing countries
>
of micro-finance
-
importance
transport networks
water telecommunications
·
energy power
,
, , ,
strong correlation between country's development stage and quality of road network
·
poor infrastructure
- "
supply costs uncompetitive labour mobility
·
, -
when rainfall less than
eg. India's irrigation system unable cope expected
to
·
↳
difficult to sustain food
production
, OBSTACLES TO DEVELOPMENT
wealthy countries subsidise farmers
·
undermining market access for some of the world's poorest producers
↳
US farmers are subsidised to
produce more cotton
·
↳
Inglobal prices
·
tariff/non-tariff barriers
↳
stopping developing countries from moving into the export of higher value added
products
how authorities
manage scarce resources to
improve economic outcomes &
living standards
high levels of corruption will winder development
*
↳
inhibit inward investment
domestic businesses will
-
>
invest overseas
stable & effective framework to collect taxes
·
legal system needs to
protect private property rights
·
destruction of
physical capital
·
diversion of labour from
production to fighting
·
death of labour
·
resources
diversion of investment into
military capital
·
loss of confidence
deterring investment
·
shortage of human capital
·
·
education quality is poor
US World
eg university enrolment Africa average
·
in
7 % VS30%
lose limited skilled workforce to other countries
·
↳
brain drain
reliant
imports
·
on
↳
susceptible to price increases
↳
pushes up its import bill
MX difference
might have to be covered by foreign borrowing (external debt
·
,
inflow of
or reliance on
capital investment from overseas multinationals
has balance of
eg Ethiopia persistentf large payments deficit
·
a
