Chapter 19 Barriers to Economic growth and development

Question 1

Construct poverty cycle

Question 2

Explain economic inequality as an economic barrier

Answer 2

Highly unequal distributions of income are a barrier
Greater equality in income distribution -> more rapid growth and more development

Question 3

Explain the limited access to infrastructure

Answer 3

Infrastructure is important to economic development
- strong positive association between higher levels of investment in infrastructure and economic growth
- fuel economic growth by reducing the cost of production and transportation of goods and services, increase the productivity of FOP, create positive externalities
- Better infrastructure -> enjoy a better access to education, health care services and clean water
- raises the labour productivity, which leads to greater employment and rising income

Developing countries perform poorly in infrastructure due to financial problems
-inadequate maintenance and poor quality
-limited access by the poor

Question 4

Define infrastructure

Answer 4

Infrastructure is the type of physical capital resulting from investment

Question 5

Explain the limited access to appropriate technology

Answer 5

Appropriate technology is a technology that well-suited to particular economic, geographical, ecological and climate conditions of a country
Labour-intensive technologies:
-Increase local employment, use of local skills and materials

Capital-intensive technologies:
-large supplies of labour will displace workers and increase unemployment
-Resources are spent on purchasing or researching on expensive capital-intensive technologies

Difficulties in the development of appropriate technologies:
-Very few resources to devote to R&D
-Low incentives for private section to engage in R&D