4.9 Barriers to economic growth and development

Trade barriers can limit access to global markets, these barriers are often referred to as protectionist policies. These are Quotas, tariffs, etc.  As globalization occurs these barriers will reduce.

If there is a informal economy in the country these profits are untaxed and thus no tax revenue is gained by the government which could have been used to provide for needs of the poor like low cost housing, healthcare and education.

If a country is over dependent on its primary sector it can cause the rate of economic growth do decrease.

This is because of the primary sector goods having mostly income inelastic demand, meaning if incomes abroad rise, the demand for exported primary goods wont change as much. In general dependence on any 1 sector alone can be detrimental as the country becomes over specialized and finds it harder to adjust to market changes, making them vulnerable, especially due to primary sector goods having a highly volatile price due to its reliance on the environmental factors.

Primary goods are also typically raw materials hence have limited value added as opposed to manufactured or secondary sector goods which are finished goods ready to use.

Of course, extraction of primary goods put a lot of pressure on the environment and use up non renewable energy sources like coal.

Income inequality is a huge hindrance towards growth and development; if a large population has low incomes this means the aggregate demand would be relatively low for the country's total population. As the richer will now have more control over the allocation of resources as they can signal producers to produce more of what they need, the basic necessities like low cost education, healthcare and shelter might be neglected. Income inequality can also give rise to crimes as the poor may feel that they have limited opportunities and can also thus cause political unrest. People under stress of financial security will also cause productivity to reduce. This is of course also a huge proponent of poverty

If a country is under burden of its debt, this can be private or public. Funds and resources of the country will need to be diverted to paying back this debt and thus lesser can be used towards development and growth.

Low human capital will cause low productivity due to the lower skills of the work force. It is necessary to provide this population with basic needs to increase productivity.

Inflation which is high and unstable discourages investments as investors and consumers alike will have distrust in the future of the market. Lower aggregate demand and investment directly reduces growth.

Limited access to proper technologies and FOP limits economic activity as it makes it much harder to produce on large scales effectively and efficiently, this inhibits both growth and development as it can lead to unsustainable practices.

Diseases and pandemics will reduce productivity as labour will be low and of lesser quality, hence it is necessary to have good funding in healthcare, and education.