Factors influencing growth and development 4.3

Question 1

Factors preventing growth in LEDCs

5

Answer 1

Primary product dependency. Commodity prices are very volatile e.g. Angola 97% Oil. Drop in prices after financial crisis left them w $7bn in delayed payments

Savings Gap - Inadequate capital accumulation. Africa saving rate = 17% compared to 31% for middle income countries. Harrod-Domar model states that saving is required for an economy to grow, with rate of growth increasing as savings ratio increases e.g. Germany save-to-spend culture

Capital Flights

Poor infrastructure prevents TNCs from setting up premises in the country

Corruption