Unit 4.9 - Barriers to Economic Growth and/or Economic Development

All 62 cards in this deck

Every term and definition, free to read. Hit study above to practice them as flashcards.

A model showing factors that maintain ongoing poverty.

The poverty cycle

dependence on natural resources

Reliance on natural resources for economic activity, which can limit growth due to vulnerabilities like market fluctuations and environmental changes. This dependence can lead to economic stagnation if not managed properly.

political instability

A significant barrier to economic growth characterized by corruption and turmoil within political systems. Political instability disrupts development efforts and creates an uncertain environment for investment.

poverty cycle (poverty trap)

A model illustrating how interconnected factors perpetuate poverty, where low-income individuals cannot invest in their future due to immediate needs. Breaking this cycle requires intervention from government or private sectors.

primary sector production

Economic activity focused on extracting natural resources, such as agriculture and mining. Economies relying heavily on this sector face vulnerabilities due to climate conditions and resource depletion, necessitating diversification for growth.

resource endowment

The varying quantities and qualities of natural resources that countries possess, which significantly influence their economic development and growth potential.

A ranking of the level of public sector corruption in different countries.

corruption perceptions index (CPI)

Dishonest conduct by officials, often involving bribery.

Corruption

Loans of exceedingly small amounts to individuals on low incomes for self-employment projects.

micro-credit

Non-tangible assets like copyrights and patents.

Intellectual property rights

The entitlement to both tangible and intangible assets owned by an individual, organization, or government.

property rights

The established systems, structures, and contexts that shape economic behaviour in a country.

institutional framework

ELDCs

Economically less developed countries that face significant challenges such as low tax revenue due to informal economies and corruption. These obstacles hinder their ability to provide essential public goods and foster economic development.

Ease of Doing Business

A measure of how conducive a country's regulatory environment is to starting and operating a business. High rankings in ease of doing business indicate a strong legal framework that supports investment and economic activity.

Worldwide Governance Indicators (WGI)

A set of metrics that evaluate the quality of governance in countries, assessing aspects like accountability, political stability, and control of corruption. Good governance is linked to sustainable economic growth and effective resource management.

banking system

The network of institutions that provide financial services, including lending and savings. An effective banking system is crucial for economic growth, as it facilitates capital accumulation and investment, while a weak system can deter business.

bribery

A form of corruption involving illicit payments that undermines the integrity of economic transactions. It distorts resource allocation, deters investment, and negatively affects overall economic development, especially in lower-income countries.

control of corruption

Efforts and measures aimed at reducing corruption within a society, ensuring fair governance and resource allocation. Effective control mechanisms are essential for promoting economic development and well-being for all citizens.

empowerment of women

The process of increasing women's agency and equality in society, which can enhance their economic contribution and overall productivity. Empowering women leads to better health outcomes and contributes positively to economic development.

gender inequality

A barrier to economic development characterized by unequal treatment and opportunities based on gender, which restricts the workforce's potential. Addressing these disparities is essential for enhancing productivity and fostering economic growth.

good governance

Transparent and accountable management of a country's affairs. Alongside a well-enforced legal system it creates the conditions for internal and international trade, and limits corruption — the dishonest conduct of officials, firms or individuals through bribery and tax evasion.

governance

The processes and structures through which a country is managed and directed. Good governance, characterized by transparency and accountability, is essential for fostering economic growth and addressing issues like corruption and inequality.

human development

The expansion of the choices and capabilities open to people — living long and healthily, being educated, enjoying a decent standard of living — rather than growth in output alone.

intolerance

The harmful exclusion of individuals or groups based on legal, economic, social, or coercive factors, which impedes human development. Intolerance affects vulnerable populations, preventing equitable access to resources and opportunities.

legal system

The framework of laws and regulations that govern a country, including enforcement mechanisms. A weak legal system can impede economic growth by failing to protect property rights and enforce contracts, leading to instability.

political power

The capacity of individuals or groups to influence or control the policies and actions of a government. Unequal political power can hinder economic progress by limiting participation and benefits to a select few, constraining overall development.

rule of law

The principle that ensures law and order, minimizes corruption, and establishes processes that contribute to the well-being of individuals and societies, forming a crucial aspect of good governance.

social inequality

Unequal access to status, services and opportunity between groups in a society, whether by class, sex, ethnicity or region. As a barrier to development it keeps people from contributing regardless of ability.

tax structures

The system of taxation in a country, which can significantly impact economic growth. Effective tax structures can redistribute income and provide necessary funding for public services, while ineffective ones can discourage investment and economic activity.

taxation structures

The frameworks and policies that determine how taxes are imposed and collected, influencing a country’s economic performance. Effective structures can redistribute wealth but may deter investment if tax rates become excessively high, potentially stunting growth.

unequal political power and status

A barrier to economic growth and development caused by the historical dominance of the wealthy in political, social, and economic contexts. This exclusion limits progress for marginalized groups, hindering overall human development and economic advancement.

A disease caused by a parasite transmitted by mosquitoes.

Malaria

Calculated using the mean years of schooling and expected years of schooling, ranging from 1.0 to 0.0.

education index

Failing to repay borrowed money due to financial issues.

Defaulting on a loan

Financial assets necessary for a firm to produce goods or services for profit.

business capital

Government-owned assets and infrastructure that enhance productivity.

public institutional capital

Intangible attributes like ideas and creativity that drive development.

knowledge capital

The capacity for a nation to sell products or services internationally.

market access

The part of an economy that extracts and collects natural resources, covering farming, fishing, forestry and mining.

Primary sector

The stock of essential resources from Earth's ecosystems.

natural capital

The withdrawal of money, assets, and resources from a country due to economic and political uncertainties.

capital flight

Various economic activities that are not officially recorded as part of a country's gross domestic product.

informal economy

HDI

The Human Development Index (HDI) measures a country's average achievements in health, education, and income. It correlates with the Education Index, indicating the level of access to education and its impact on development.

agricultural productivity

The efficiency with which agricultural outputs are produced, influenced by factors like geography and soil fertility, affecting the livelihoods of communities dependent on farming.

appropriate technology

Technology that is suitable for the economic and social context of a country, which can enhance productivity and efficiency. Lack of access to such technology is a barrier to economic growth and development.

basic education

The fundamental level of education necessary for individuals to acquire skills and knowledge, which is crucial for gaining employment and breaking the cycle of poverty.

endemic diseases

Diseases that are consistently present in a particular region, often exacerbating poverty by affecting health and productivity, particularly in tropical climates.

exchange rate volatility

Fluctuations in the value of a currency relative to others, which can create uncertainty for investors and hinder economic stability. This instability can lead to capital flight and reduced investment.

fertility rates

The average number of children born to a woman over her lifetime, which can influence population growth. High fertility rates can hinder women's participation in the workforce, as they often need to care for larger families, impacting economic productivity.

geography

The physical location and characteristics of a country that can influence its economic development. Factors include access to transportation and resources, which can affect trade and growth.

informal sector

A segment of the economy comprising unrecorded activities not counted in GDP, including unregistered businesses and cash-paid jobs. These activities often evade taxation and government oversight, making regulation challenging and impacting economic growth, particularly in developing countries.

labour productivity

The amount of goods and services produced by a worker in a given amount of time. Factors such as health and education can influence productivity levels, impacting economic growth.

low income

A state where households earn too little to meet essential needs — measured at country level by real GDP per capita. Spending it all on essentials leaves nothing to invest, which is what locks the poverty cycle in place.

low investment

Too little capital investment for an economy to grow — the consequence of a low savings ratio, and the step in the poverty cycle that leads on to low productivity.

low productivity

A condition where individuals or economies produce goods and services at a low rate, often due to lack of skills or education, which hinders economic growth and perpetuates poverty.

low savings

A situation where individuals or economies save very little of their income, limiting their ability to invest in future opportunities and contributing to the cycle of poverty.

protectionist measures

Policies implemented by governments to restrict international trade, such as tariffs and quotas. These measures can hinder the ability of developing countries to compete in global markets.

soil fertility

The ability of soil to support plant growth, which directly affects agricultural productivity. Regions with high soil fertility can produce more food, while those with poor soil struggle to sustain livelihoods.

vicious cycle of poverty

A cycle where poverty and deprivation perpetuate each other, causing the poor to become poorer over generations. This cycle is driven by barriers such as low income and lack of education, preventing investment in future opportunities.

Systems that include legal, taxation, and banking frameworks.

Institutions

access to finance

The availability of credit and financial services necessary for investment in capital, education, and business growth. Limited access can stifle economic development, particularly for small firms and low-income households.

barriers to economic growth

Factors that inhibit economic development, including economic, political, and social obstacles that often interact. Their significance varies by country, influenced by institutional quality and access to resources.