Many of the early
growth models based most of their attention upon the physical
economic contributions necessary for growth; the need to save more,
invest more and increase GNP. However whilst these conditions are necessary,
they are by no means sufficient to ensure growth.
such as improvements in variables, which include savings and investment, are
objectives, which just can not be ignored.
It is also important
for institutions and their attitudes to improve and become more flexible. In
other words willing to change, mainly within developing countries.
It is important to
recognise that many of the conditions facing today's LDC's are different from
pre-industrial conditions of the high-income countries. The is especially
true of the poorest of the LDC's.
is essential for political growth, however with change must come conflicting
views and those who are reluctant to change. During change, power may shift
between group's e.g. from landowners to tenant farmers.
Tension can lead to
political instability, which may lead to wars and ruin any chance of growth
Many countries have
been scarred by wars e.g. WWII. Countries have not had enough time to develop
a national identity allied with popular development policies.
The key aim for
countries was to modernise the way they ran their country and rapidly
introduce industrialisation. We do of course have the problem of corruption
within governments and this means growth is limited due to lack of funds.
Vested interests industrial countries may equally hold back change and growth
in LDC's. In dealings between the institutions of LDC's and developed
countries, power lies with the rich.
A major problem with
LDC's is the debt they have built up over the years, which is a great
constraint on further growth.
Many third world
economists believe this to be a major constraint and argue that the political
dependency of colonisation has merely been replaced by an economic
There are many
barriers to economic growth especially for LDC's; these include the problems
with objectives such as tourism (structural change). For example a country
may be landlocked and so it is hard for them to create seaside resorts, which
are very popular.
Training is seen to
be a big factor when talking about constraints. Without training, people find
it hard to find unemployment and therefore growth is not possible.
Investment plays a
major part in growth. If foreign investors decide not to invest in a certain
country then that country looses out a great deal.
levels of savings leading to low level of investment.
may lead to over investment in the military instead of consumer goods.
reliance on one or more sectors- this occurs a lot in the agricultural