- Barrier to development
- A barrier to development is anything that holds back a lasting rise in a country's output per person and living standards, whether economic, political or natural.
- Barrier to trade
- A barrier to trade is a tariff, import quota or other government rule that restricts goods and services crossing a border.
Barriers to development
Can you name six barriers to development, four economic and two non-economic?
The first four are economic barriers; the last two are non-economic.
Primary product dependency is relying on a few unprocessed commodities, such as crops, metals or oil, for most export earnings.
Can you think of an example?
A country earns most of its foreign currency from coffee. If the world coffee price halves and sales stay the same, its earnings from coffee halve.
A savings gap is when incomes are so low that households save too little to fund the investment the economy needs to grow.
Can you think of an example?
Families in a poor farming region spend all they earn on food, so the local bank has almost nothing to lend to a farmer who wants a water pump.
A foreign currency gap is when exports earn too little foreign currency to pay for the imported machinery, fuel and parts a country needs.
Can you think of an example?
A new power station needs turbines that only foreign firms make, and the country's cotton exports earn too little foreign currency to pay for them.
Capital flight is when savers and investors move large sums out of a country, draining the funds for investment at home.
Can you think of an example?
After a disputed election, wealthy families move their savings to banks abroad, so local banks have less to lend.
Corruption is the misuse of public office for private gain, such as officials taking bribes or diverting public money.
Can you think of an example?
A road contract goes to the firm that pays the minister most, not the one that bids lowest, so the road costs more and wears out sooner.
Civil war is armed conflict between groups inside one country, which destroys capital, kills and displaces workers and drives investors away.
Can you think of an example?
Fighting closes the roads from the farms to the port, so crops rot unsold, schools shut and foreign firms cancel plans to build there.