Obstacles to Economic Growth
Obstacles to economic growth
The factors in charge for slow development of an economy may be generally classified as
(1) Economic Factors,
(2) Social Factors and
(3) Political Factors
Economic Factors to economic growth
Amongst the economic factors we may talk about the following:—
(i) Foreign control. The foreign leaders of a nation are mostly worried with the wealth of their own nation and they cruelly take advantage of the reserves of the nation they rule to attain their own success at the cost of the nation under them. The majority of the states of Africa and Asia have been under alien rule, and they bear economically.
(ii) Exploitation of Resources owing to market limitations. By market limitations we indicate the stillness of the aspects of price rigidities, production, lack of knowledge with regards to market movements, motionless social organization, be deficient in specialization, etc...
(iii) Small investment and saving rates. One more cause of the deficiency and under-development of the developing nations are the awfully small investment and saving rates in these nations. Unless the public decrease their expenditure and keep a considerable quantity of their revenue and unless there are cost-effective canals of investment, it is redundant to anticipate a nation to turn out to be economically wealthy.
(iv) Demonstration result. It has been seen that wealthy persons in a backward nation are in the practice of copying the higher standards of living existing in the urbanized nations.They indulge unobtrusive expenditure squandering away their revenues. This decreases their tendency to save which is very necessary for economic growth.
(v) Rapidly Growing populace. This is the major obstruction in the way of economic development. A large part of the national income is consumed up by the starving masses leaving no space for savings for investment. Unless the rate of population growth is managed, all growth attempt amounts to inscription on sand.
(vi) Incompetent Agrarian classification. We find in India runaway land-lordism at the peak and serfdom at the base. No doubt Indian agriculture is extremely diffident. Sluggish agricultural development discourages general economic development in the nation.
(vii) Lack of Innovating Entrepreneurs. The subsistence of lively and innovating entrepreneurs can be an influential mechanism of economic development in the nation. Schumpeter gave an essential place to such entrepreneurs in the financial system.