8.2.4
Barriers to Development 2
Barriers to Development - Healthcare and Human Capital
Barriers to Development - Healthcare and Human Capital
There are a host of factors which hold back the development of certain countries.
Inadequate human capital
Inadequate human capital
- Poor quality of human capital leads to a lack of productivity and efficiency.
- This leads to the cost of production being higher than in other countries and uncompetitive exports.
- In 1972, Iraq nationalised the western Iraq National Oil company. It was better to nationalise in 1972 than in 1950 because this gave the Iraqi population 22 years to build up the skills to run oil wells and oil refineries.
Lack of property rights
Lack of property rights
- Institutional factors include a lack of property rights, a democratic government or an independent legal system.
- Property rights are defined as having four main characteristics:
- The right to use the good.
- The right to earn income from the good.
- The right to transfer the good to others.
- The right to enforce property rights (rights of ownership).
- By lacking them, or not enforcing them, this discourages entrepreneurship or FDI.
Lack of healthcare
Lack of healthcare
- The lack of adequate healthcare causes people to be ill more often and to have lower life expectancy.
- Both of these factors cause workers’ productivity to be lower with more absenteeism (staying off work for no good reason).
- Poor healthcare also means people try to have larger families as a way to hedge the risk of some children not surviving. This creates an added burden of high population growth and dependants.
Barriers to Development - Capital and Commodities
Barriers to Development - Capital and Commodities
Primary product dependency, the volatility of commodity prices, capital flight and debt can all be barriers to development.
Human capital flight
Human capital flight
- Poor quality of human capital leads to a lack of productivity and efficiency.
- This leads to the cost of production being higher than other countries and uncompetitive exports.
- Often, high skilled labour migrates to other nations to earn higher wages. This can leave developing nations with a labour shortage.
Primary product dependency
Primary product dependency
- Primary products are commodities like iron ore, oil or agricultural products like coffee, rice and cocoa beans.
- Supply in commodities is inelastic. These crops can take years or even millennia (for things like oil) to develop. When demand changes, prices can change by a large amount.
- Income from exports can rise if commodity prices rise and exports can decrease rapidly if commodity prices fall.
- This uncertainty may deter investment in that country.
- It can also create exchange rate volatility which also discourages investment.
Debt
Debt
- If a developing nation has a lot of debts, it will spend some of its tax revenues on interest payments. Developing nations are usually riskier borrowers than developed nations, so they may pay a higher interest rate too.
- Debt can reduce a developing nation's government's spending on infrastructure, education and healthcare.
- Some people argue for debt relief for developing nations. This would involve cancelling these nation's debts. However, the money from the debt may be embezzled by corrupt individuals and may generate moral hazard, with nations borrowing with no intention of repaying a debt.
Prebisch-Singer hypothesis
Prebisch-Singer hypothesis
- The Prebisch-Singer hypothesis claims that, because the demand for primary products doesn't change much with income (they are income inelastic), that rising incomes don't lead to increased demand for primary products, unlike manufacturing and services' products.
- Therefore, if incomes rise globally, nations producing primary products won't see much of a change in demand. Nations producing manufacturing goods would because manufactured products are income elastic.
- This would suggest that primary products are not a sustainable development strategy for a country.
1Introduction to Markets
1.1Nature of Economics
1.1.1Economics as a Social Science
1.1.2Positive & Normative Economic Statements
1.1.3The Economic Problem
1.1.4Resources
1.1.5Production Possibility Frontiers
1.1.6Specialisation & Division of Labour
1.1.7Types of Economies
1.1.8End of Topic Test - Nature of Economics
1.1.9Application Questions - Nature of Economics
1.2How Markets Work
1.2.1Rational Decision Making
1.2.2Demand
1.2.3Elasticities of Demand
1.2.4Elasticities of Demand 2
1.2.5Elasticity & Revenue
1.2.6Supply
1.2.7Elasticity of Supply
1.2.8Price Determination
1.2.9Price Mechanism
1.2.10Consumer & Producer Surplus
1.2.11Indirect Taxes & Subsidies
1.2.12A-A* (AO3/4) - Taxing Prices or Quantities?
1.2.13Alternative View of Consumer Behaviour
1.2.14End of Topic Test - Markets
1.2.15A-A* (AO3/4) - Markets
2Market Failure
2.1Market Failure
2.2Government Intervention
2.2.1Government Intervention in Markets
2.2.2Subsidies & Price Controls
2.2.3Pollution Permits & Regulation
2.2.4A-A* (AO3/4) - European Emissions Trading
2.2.5State Provision & Information Provision
2.2.6Government Failure
2.2.7End of Topic Test - Government Intervention
2.2.8A-A* (AO3/4) - Government Intervention
3The UK Macroeconomy
3.1Measures of Economic Performance
3.1.1Measuring Economic Growth
3.1.2National Income Data
3.1.3Inflation
3.1.4Causes of Inflation
3.1.5Consequences of Inflation
3.1.6Employment & Unemployment
3.1.7Causes & Impact of Unemployment
3.1.8A-A* (AO3/4) - Hysteresis
3.1.9Balance of Payments
3.1.10Current Account Deficit & Imbalances
3.1.11End of Topic Test - Economic Performance
3.1.12Application Questions Macroeconomy
3.2Aggregate Demand
3.3Aggregate Supply
3.4National Income
4The UK Economy - Policies
4.1Macroeconomic Objectives & Policies
4.1.1Possible Objectives
4.1.2Demand-Side Policies - Monetary
4.1.3Demand-Side Policies - Monetary 2
4.1.4A-A* (AO3/4) - The Future of Interest Rates
4.1.5Demand-Side Policies - Fiscal
4.1.6Demand-Side Policies in 2007-08
4.1.7Strengths & Weaknesses of Demand Side
4.1.8Supply-Side Policies
4.1.9Supply-Side Policies 2
4.1.10Conflicts Between Objectives
4.1.11A-A* (AO3/4) - Conflicting Incentives
4.1.12Phillips Curve
4.1.13End of Topic Topic - Policies & Objectives
4.1.14Application Questions - UK Policies
5Business Behaviour
5.1Business Growth
5.2Business Objectives
6Market Structures
6.1Market Structures
6.1.1Efficiency
6.1.2Perfect Competition
6.1.3Perfect Competition 2
6.1.4Monopolistic Competition
6.1.5Oligopolies
6.1.6The Prisoner's Dilemma
6.1.7Collusion in Oligopolistic Markets
6.1.8A-A* (AO3/4) - Which Factors Affect Collusion?
6.1.9Monopolies
6.1.10Price Discrimination
6.1.11Monopsony
6.1.12A-A* (AO3/4) - Models in Economics
6.1.13Contestability
6.1.14Benefits of Contestability
6.1.15End of Topic Test - Market Structures
6.1.16Application Questions - Market Structures
6.1.17A-A* (AO3/4) - Cereal Collusion
6.2Labour Market
6.2.1Demand for Labour
6.2.2Supply of Labour
6.2.3Labour Market Imperfections
6.2.4A-A* (AO3/4) - Labour Productivity & Unemployment
6.2.5A-A* (AO3/4) - What Level of Unionisation is Good?
6.2.6Wage Determination
6.2.7Elasticity of Labour Supply & Demand
6.2.8Intervention in Setting Wages
6.2.9End of Topic Test - Labour Market
6.2.10A-A* (AO3/4) - Labour Markets
6.3Government Intervention
6.3.1Reasons for Government Intervention
6.3.2Government Promotion of Competition
6.3.3Usefulness of Competition Policy & Examples
6.3.4A-A* (AO3/4) - Modern Competition Policy
6.3.5Privatisation
6.3.6Government Regulation
6.3.7A-A* (AO3/4) - Nationalisation vs Privatisation
6.3.8Government Protection of Suppliers and Employees
6.3.9Impact of Government Intervention
6.3.10End of Topic Test - Government Intervention
6.3.11Application Questions - Government Intervention
7A Global Perspective
7.1International Economics - Globalisation & Trade
7.2International Economics - Currency
7.2.1Merged Currency
7.2.2Restrictions on Free Trade
7.2.3Arguments for Protectionism
7.2.4Arguments Against Protectionism
7.2.5Balance of Payments
7.2.6Balance of Payments 2
7.2.7Floating Exchange Rates
7.2.8Fixed Exchange Rate
7.2.9International Competitiveness
7.2.10End of Topic Test - International Economy
7.2.11Application Questions - International Economics
8Finance & Inequality
8.1Poverty & Inequality
8.2Emerging & Developing Economies
8.2.1Measures of Development
8.2.2Factors Influencing Growth & Development
8.2.3Barriers to Development
8.2.4Barriers to Development 2
8.2.5A-A* (AO3/4) - The Bottom Billion
8.2.6Development Strategies
8.2.7Interventionist Strategies
8.2.8Aid
8.2.9International Institutions
8.2.10International Institutions 2
8.2.11End of Topic Test - Emerging & Developing
8.2.12Application Questions - Developing Countries
8.3The Financial Sector
8.4Role of the State in the Macroeconomy
9Examples of Global Policy
9.1International Policies
Jump to other topics
1Introduction to Markets
1.1Nature of Economics
1.1.1Economics as a Social Science
1.1.2Positive & Normative Economic Statements
1.1.3The Economic Problem
1.1.4Resources
1.1.5Production Possibility Frontiers
1.1.6Specialisation & Division of Labour
1.1.7Types of Economies
1.1.8End of Topic Test - Nature of Economics
1.1.9Application Questions - Nature of Economics
1.2How Markets Work
1.2.1Rational Decision Making
1.2.2Demand
1.2.3Elasticities of Demand
1.2.4Elasticities of Demand 2
1.2.5Elasticity & Revenue
1.2.6Supply
1.2.7Elasticity of Supply
1.2.8Price Determination
1.2.9Price Mechanism
1.2.10Consumer & Producer Surplus
1.2.11Indirect Taxes & Subsidies
1.2.12A-A* (AO3/4) - Taxing Prices or Quantities?
1.2.13Alternative View of Consumer Behaviour
1.2.14End of Topic Test - Markets
1.2.15A-A* (AO3/4) - Markets
2Market Failure
2.1Market Failure
2.2Government Intervention
2.2.1Government Intervention in Markets
2.2.2Subsidies & Price Controls
2.2.3Pollution Permits & Regulation
2.2.4A-A* (AO3/4) - European Emissions Trading
2.2.5State Provision & Information Provision
2.2.6Government Failure
2.2.7End of Topic Test - Government Intervention
2.2.8A-A* (AO3/4) - Government Intervention
3The UK Macroeconomy
3.1Measures of Economic Performance
3.1.1Measuring Economic Growth
3.1.2National Income Data
3.1.3Inflation
3.1.4Causes of Inflation
3.1.5Consequences of Inflation
3.1.6Employment & Unemployment
3.1.7Causes & Impact of Unemployment
3.1.8A-A* (AO3/4) - Hysteresis
3.1.9Balance of Payments
3.1.10Current Account Deficit & Imbalances
3.1.11End of Topic Test - Economic Performance
3.1.12Application Questions Macroeconomy
3.2Aggregate Demand
3.3Aggregate Supply
3.4National Income
4The UK Economy - Policies
4.1Macroeconomic Objectives & Policies
4.1.1Possible Objectives
4.1.2Demand-Side Policies - Monetary
4.1.3Demand-Side Policies - Monetary 2
4.1.4A-A* (AO3/4) - The Future of Interest Rates
4.1.5Demand-Side Policies - Fiscal
4.1.6Demand-Side Policies in 2007-08
4.1.7Strengths & Weaknesses of Demand Side
4.1.8Supply-Side Policies
4.1.9Supply-Side Policies 2
4.1.10Conflicts Between Objectives
4.1.11A-A* (AO3/4) - Conflicting Incentives
4.1.12Phillips Curve
4.1.13End of Topic Topic - Policies & Objectives
4.1.14Application Questions - UK Policies
5Business Behaviour
5.1Business Growth
5.2Business Objectives
6Market Structures
6.1Market Structures
6.1.1Efficiency
6.1.2Perfect Competition
6.1.3Perfect Competition 2
6.1.4Monopolistic Competition
6.1.5Oligopolies
6.1.6The Prisoner's Dilemma
6.1.7Collusion in Oligopolistic Markets
6.1.8A-A* (AO3/4) - Which Factors Affect Collusion?
6.1.9Monopolies
6.1.10Price Discrimination
6.1.11Monopsony
6.1.12A-A* (AO3/4) - Models in Economics
6.1.13Contestability
6.1.14Benefits of Contestability
6.1.15End of Topic Test - Market Structures
6.1.16Application Questions - Market Structures
6.1.17A-A* (AO3/4) - Cereal Collusion
6.2Labour Market
6.2.1Demand for Labour
6.2.2Supply of Labour
6.2.3Labour Market Imperfections
6.2.4A-A* (AO3/4) - Labour Productivity & Unemployment
6.2.5A-A* (AO3/4) - What Level of Unionisation is Good?
6.2.6Wage Determination
6.2.7Elasticity of Labour Supply & Demand
6.2.8Intervention in Setting Wages
6.2.9End of Topic Test - Labour Market
6.2.10A-A* (AO3/4) - Labour Markets
6.3Government Intervention
6.3.1Reasons for Government Intervention
6.3.2Government Promotion of Competition
6.3.3Usefulness of Competition Policy & Examples
6.3.4A-A* (AO3/4) - Modern Competition Policy
6.3.5Privatisation
6.3.6Government Regulation
6.3.7A-A* (AO3/4) - Nationalisation vs Privatisation
6.3.8Government Protection of Suppliers and Employees
6.3.9Impact of Government Intervention
6.3.10End of Topic Test - Government Intervention
6.3.11Application Questions - Government Intervention
7A Global Perspective
7.1International Economics - Globalisation & Trade
7.2International Economics - Currency
7.2.1Merged Currency
7.2.2Restrictions on Free Trade
7.2.3Arguments for Protectionism
7.2.4Arguments Against Protectionism
7.2.5Balance of Payments
7.2.6Balance of Payments 2
7.2.7Floating Exchange Rates
7.2.8Fixed Exchange Rate
7.2.9International Competitiveness
7.2.10End of Topic Test - International Economy
7.2.11Application Questions - International Economics
8Finance & Inequality
8.1Poverty & Inequality
8.2Emerging & Developing Economies
8.2.1Measures of Development
8.2.2Factors Influencing Growth & Development
8.2.3Barriers to Development
8.2.4Barriers to Development 2
8.2.5A-A* (AO3/4) - The Bottom Billion
8.2.6Development Strategies
8.2.7Interventionist Strategies
8.2.8Aid
8.2.9International Institutions
8.2.10International Institutions 2
8.2.11End of Topic Test - Emerging & Developing
8.2.12Application Questions - Developing Countries
8.3The Financial Sector
8.4Role of the State in the Macroeconomy
9Examples of Global Policy
9.1International Policies
Unlock your full potential with GoStudent tutoring
Affordable 1:1 tutoring from the comfort of your home
Tutors are matched to your specific learning needs
30+ school subjects covered