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.
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| 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.