What are some obstacles to economic growth in developing nations?

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mkoren eNotes educator| Certified Educator

There are obstacles to growth in some developing countries. Economic growth occurs, not by doing more of the same thing, but by making changes and by developing new products. Some of the industries that exist in developing countries make it harder for businesses to change and to go to the next step. For example, a country that makes coffee is going to find it harder to go to the step in economic growth. The things that are needed to grow coffee may not help with the things that are needed to modernize and to change the economy. For example, it would be hard for a country growing coffee to develop new businesses that deal with technology. Also, the government must play an active role to facilitate the businesses going to the next step in economic development. This doesn’t always occur in some countries.

There are other obstacles to economic growth in developing countries. One is the lack of natural resources, such as land. Many of these countries are highly populated. With a lack of fertile land, food shortages occur. These countries won’t be able to export food, and they will face serious problems such as starvation. In some countries, resources exist, but they are untapped. Without the necessary technology to reach these resources, the resources remain untapped.

In some cases, there is a lack of human capital. Countries that have poor educational systems will lack the skilled workers needed to fill the jobs that are available. In countries with poor medical systems, there are higher mortality rates, and workers may not be healthy enough to work productively at all times.

Some countries don’t have a lot of capital available for investment. Because the people don’t have a great deal of money, there is not a lot of savings that can be used to invest in the businesses and in the economy.

Finally, there might not be a well-developed infrastructure system. With a poorly developed transportation system, such as roads and bridges, and with an underdeveloped communication system, economic growth will be slowed. This will hinder getting products to market and to consumers around the world.

pohnpei397 eNotes educator| Certified Educator

There are many obstacles to economic growth in developing countries.  Let us look at a few of them.

Governmental problems.  Governments in developing countries can often be corrupt.  They can act in ways that enrich only a few of the elite members of society without helping the population as whole.  They can be very unpredictable as well.  This can scare off foreign investors.

Cultural issues.  Some scholars argue that some countries lack the right culture for economic development.  Their people might not want to take risks in order to start new businesses.  Their people might feel that traditional cultural duties are more important than showing up to work every day.  These sorts of cultural issues can slow a country’s growth.

Foreign debt.  Sometimes, countries have to take actions that they do not want to take because they need to pay off their creditors.  They might have to do things that bring money in the short term even if that hurts their ability to invest for the long term.

Lack of human resources.  This may be a type of governmental problem.  Many developing countries lack the educational infrastructure needed to develop a workforce that could support a more modern economy.

Foreign competition.  Developing countries have to compete against companies from the developed world.  This can be very difficult.  It can force developing countries to stay with making low value-added products using cheap labor instead of becoming more modernized.

All of these factors (and more) can hinder developing countries’ economic growth.