Barriers to Economic growth & Development

Question 1

Discuss Indebtedness as a barrier to economic growth and development and give an example

Answer 1

1) Indebtedness
Government Debt is the amount of money the government owes to lenders. Occurs when government government expenditure exceeds government revenue - budget deficit

Zambia’s debt accumulates to nearly 27 billion, 10.1 billion of which is local debt, and 16.86 billion of which is debt stemming from foreign holdings. With interest arrears from foreign debt amounting to 520 million, the culmination of Zambia’s debt is so significant that it is equivalent to 115% of the country’s GDP.

Impact:
likely to face a significant budget deficit which will cripple the government spending capacity and capabilities. Worsened by Covid 19, and the economic recessions, the government indebtedness hinders its ability to stimulate an economic recovery.

Question 2

Discuss Dependence on primary sector production as a barrier to development and give an example

Answer 2

Dependence on primary sector production refers to heavily relying on the primary sector of an economy is the sector that produces primary commodities, which are goods arising from the factor of production land.

Example:
Sierra Leone is well known for its vast endowment in minerals which include diamonds, rutile, bauxite, gold, iron ore etc.Mining has been the mainstay of the economy since independence and the government has remained heavily dependent on mineral resources over the years. Mining contributed 0.7 percent to GDP, constituted 65 percent of export earnings, and 3 percent to employment in 2018. However, The economy of Sierra Leone one of the least developed countries with a gross domestic product (GDP) of approximately US$1.9 billion in 2009.

Question 3

Discuss Political Instability as a barrier to development and give an example

Answer 3

Haiti has been known to have had political/macroeconomic instability
From High gang violence to unpopular government policies such as the removal of fuel subsidies in 2018 which led to political unrest, Haiti hasn’t facilitated an economic environment that fosters economic growth. Exacerbated by the assassination of the Haiti president in 2021, haitis economic instability has repelled foreign direct investment into the country. It has also led to the persistence of poverty, corruption, vulnerability to natural disasters, and low levels of education for much of the population represent some of the most serious impediments to Haiti’s economic growth.