Obstacles to developmentObstacles to development

GovernanceCertainly there is a great deal of evidence to suggest that disparities in the level of development between countries are related to governance and that poor governance is an obstacle to development.

•The decisions governments make particularly in terms of public spending•The economic / political ideology•The level of corruption•The amount of bureaucracy and hindrance to private enterprise•The accountability of government to its people•Security and the rule of law

Robert Mugabe’s Zimbabwe is a tragic example of this.

Access to Capital

The growth of the economies of most of the richer countries in the world has been based on the right to own property and access to capital.

Without access to capital businesses cannot grow.

No property rights and no legal status for your business = no access to credit = no capital to invest in the growth of your business = no possibility for growth and expansion = low revenue = low profit

This is the main problem for people operating in the informal sector.

Hernando de Soto – The Mystery of Capital. Watch his youtube film.

DiseaseDiseases such as Malaria and HIV/Aids reduce the productivity of a country because death rates among economically active population are increased, people are too sick to work or caring for the sick.

High levels of disease, infant mortality rates and fertility rates can be related to poor provision of health care

Nagle page 438/9

Natural HazardsBack to the idea of environmental determinism.

Natural hazards can be an obstacle to development.

Drought (Ethiopia mid 1980s), 2004 Indian Ocean Tsunami impact on Indonesia, regular flooding in Bangladesh, tropical storm damage in Caribbean.

Unfair trade and protectionism

Subsidies paid to producers in MEDCs and trade barriers and protectionism limiting access to MEDC markets for LEDC producers are seen as major obstacles to development.

Levels of protectionism are high in the global economy and many analysts argue that the rules of the Global Economy were made by MEDCs for the benefit of MEDCs.

Trade – Benefits for all?

In theory trade should benefit all countries.International trade has been going on for a long

time, so why are not all countries rich?

http://www.maketradefair.com/en/index.php?file=issues_dumping.htm&cat=2&subcat=3&select=1

TNCs act in their shareholders interests.

Nation states act in their citizens interests.

International organisations and trade regulations have been developed to favour the nation states which designed them.

Rich countries protect their primary, secondary and tertiary industries.

Primary – EU Common Agricultural Policyhttp://news.bbc.co.uk/2/hi/business/4466388.stm

Secondary – EU Anti dumping rules on shoes made in Chinahttp://news.bbc.co.uk/2/hi/business/4747186.stm

http://news.bbc.co.uk/2/hi/business/4886008.stm

Tertiary – Novartis (Swiss Pharmacuetical company attempts to stop generic versions of their drugs being produced in India (they lost the case)http://www.maketradefair.com/en/index.php?file=a2m_main.html&cat=2&subcat=4&select=1

There is no easy answer

The theories attempting to explain disparities in development between countries are complex and offer sometimes opposing ideas.

The obstacles to development are in some cases environmental but in all cases a combination of internal and external economic, social and political factors are involved.

The debate on the different approaches to development is fiercely fought…