Wednesday, January 13, 2021

What are the Barriers to Economic Growth and Development?

Economic development does not always proceed according to what is set for it. 

Many societies and countries may face many different obstacles and barriers that limit their progress. Look carefully at the top 5 barriers to economic growth and development.

The 5 Biggest Barriers to Economic Growth and Development
Barriers to Economic Growth and Development

What are Major Obstacles to Economic Development?

There are many obstacles and barriers to economic growth and development.  These economic obstacles limit the progress of societies and nations.

These obstacles are: high population growth rates, high illiteracy rates, poor infrastructure, human capital inadequacies, foreign currency gap and capital flight, unsafe water supplies, inadequate housing facilities, ethnic and religious conflict, corruption, poor governance, poor health services, primary product dependency, declining terms of trade, etc.

In this article, we will discuss the top 5 obstacles and barriers to economic growth and development.

 

Concept of Economic Development

Economic development is defined as the process aimed at promoting the growth of a country's economy by applying many developmental plans and by implementing a set of successful economic strategies that make it more advanced and developed, thus affecting society positively.

 

Economic development is usually defined as the amount of development that takes place in the economy and on the business cycle during a certain period of time or the set of measures and plans that many individuals who make decisions seek to take within the borders of the state.

These decisions are important and vital decisions that raise the economic level in general, as well as improve the conditions of citizens and individuals who reside in the country, which leads to improving the business cycle in general and improving all aspects of life.

 

In short, economic development is everything that individuals and groups living in society do in order to improve economic conditions and generate income and money within the country's borders, i.e. all business, investments, and projects as well as internal and external commercial activities that are carried out inside the country, and that bring financial and good economic returns to the state.

 

It is possible that the economic development process will face some difficulties and obstacles, and that some changes will occur in all the plans that are developed.

There are many things that happen to the economy in general and affect negatively, but they are unpredictable or even minimized.

Here, we have discussed the barriers to economic development and the types of financial risks facing the economy today.

 

5 Major Obstacles to Economic Development

Economic development is considered one of the matters and criteria that may change with the surrounding circumstances, and also may not proceed according to the decreed plan.

Economic development may face many obstacles and barriers that limit its evaluation and growth. Economic barriers make it difficult for a firm to enter a given market.

 

From this standpoint, successful plans usually take into account the economic barriers, as well as place them at the forefront and work to find solutions to confront them by exploiting successful means to overcome and control them.

The following is an explanation of the most significant obstacles economies can face today.

 

1. High population growth rates:

The impact of population growth can be positive or negative depending on the circumstances.

The random increase in population is one of the most important obstacles that the economy may face in any country.

Population growth is considered one of the biggest obstacles and barriers that may slow down the process of economic growth and development.

The large population is considered a great pressure on economic resources, as economic resources are often insufficient and do not cover the existing population, which in turn leads to the formation of pressure on the resources and services provided.

For example, investment projects that in turn increase economic development may not lead to sufficient numbers of employees.

 

2. Low level of the human factor:

The increase in the population numbers compared to the obstacles to economic development leads to the exit of labor outside the country, as well as increases the processes of immigration abroad.

Building human factors is one of the most important factors for the success of any economic plan, and this requires improving the educational outcomes of all kinds

The human factor is considered one of the most important economic factors and constituents, which in turn increase the production of projects, improve economic growth and move the economic cycle.

Therefore, the state must work to provide special attention to all human resources, as well as provide special attention to university students, institutes, colleges, etc., as well as all necessary provisions for their training.

 

3. Lack of an attractive investment destination:

The lack of an attractive environment for investment and the lack of economic resources and infrastructure are among the biggest challenges facing economic development.

Economic development depends mainly on increasing the number of investments, which in turn lead to an increase in the number of employees and their employment and work to move the economic wheel in general. The weakness of economic projects leads to an increase in the unemployed, and also reduces the processes of economic development.

Encouraging investment and taking care of its infrastructure is one of the most important means of achieving economic development and providing various job opportunities to employ the unemployed, in addition to the ability of the investment to exploit the resources available for production and achieve profits that contribute to supporting the economy.

 

4. Poor transportation network:

Transportation is considered one of the most important factors of economic development, which in turn contributes to activating and developing all aspects of life and making life easier and better.

Poor transportation systems adversely affect economic and industrial competitiveness by raising the unit cost of freight. It also raises the damages total inventories, incurred in transit, and ordering and overhead costs.

Good transport infrastructure lowers the costs of moving people and goods. This increases economic productivity.

 

5. Lack of innovative solutions:

The inability to find innovative solutions is one of the most important obstacles to economic development.

This problem appears in a large and clear way in some societies that rely on traditional means to do their business. Perhaps the most prominent example of this is the complete dependence of many societies and countries on oil. It is possible to reduce the oil bill by making additional efforts in finding and applying alternative means.

Some countries insist on the use of oil, and the developed nations have become alienated from, and reduced its use due to the great harm it inflicts on humans at all levels.

Innovative solutions greatly contribute to the improvement and development of countries ’economies.

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