Study Notes
Barriers to economic development include various factors that prevent low-income countries from achieving economic prosperity and improving well-being. Poverty Cycle — self-reinforcing mechanisms causing poverty to persist without intervention. Example: Low income leads to low savings and investment, resulting in low productivity and income growth. Rising Economic Inequality — unequal distribution of income and wealth hindering growth. Example: Inequality in health and education limits employment opportunities. Limited Access to Infrastructure and Technology — lack of sustainable infrastructure affects economic growth. Example: Poor transport networks limit economic activities. Dependence on Primary Production — reliance on natural resources and primary commodities. Example: High price volatility of commodities affects export earnings. Limited Access to International Markets — difficulties in exporting to developed countries. Example: High tariffs on agricultural products. Informal Economy — unregulated economic activities leading to tax evasion. Example: Workers in informal sectors face poor working conditions. Capital Flight — transfer of financial capital to other countries due to economic instability. Example: Fear of property loss leads to capital being moved abroad. Indebtedness — high levels of debt affecting future growth. Example: Rising debt servicing costs lower credit ratings. Geography and Landlocked Countries — lack of access to ports hinders trade. Example: Landlocked countries depend on neighbors for trade. Tropical Climate and Endemic Diseases — climate affects economic activities and health. Example: Tropical diseases reduce labor productivity.
Exam Tips
Key Definitions to Remember
- Poverty Cycle
- Rising Economic Inequality
- Limited Access to Infrastructure and Technology
- Dependence on Primary Production
- Informal Economy
- Capital Flight
Common Confusions
- Confusing poverty cycle with temporary poverty
- Misunderstanding the impact of informal economies
Typical Exam Questions
- What is a poverty cycle? A self-reinforcing mechanism causing poverty to persist.
- How does rising economic inequality affect development? It limits opportunities and growth by creating disparities in health and education.
- Why is dependence on primary production a barrier? It exposes countries to risks due to price volatility of commodities.
What Examiners Usually Test
- Understanding of how different barriers affect economic development
- Ability to explain the significance of infrastructure in economic growth
- Knowledge of the impact of international market access on development