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Political and social barriers - Coggle Diagram
Political and social barriers
Weak institutional framework
Legal system an property rights
"baskets" of legal rights to uphold property rights
own assets
sell assets
use assets
benefit from assets
exclude others from using or taking over assets
If a person is unable to own property there is no incentive to improve it.
More trust in the system will lead to more investments
Banking system
Inability to track the money in the country and control money supply to decrease inflation or vice versa
Trading possibilities diminish without a proper banking system and an efficient way to circulate money within the country and to foreign countries. Cash is not as mobile and can only be used locally
Cash can be lost or damaged --> Vulnurable and decreasing money supply
Savings
Required for investments
Necessary for growth
Hard to have savings without extra income
Needs to be safe
If untrustworthy, people will invest outside the country
Non-official banks or institutions will take advantage of desperate people with high interest rates --> debt trap
Ineffective taxation structure
Less tax revenue for the government to invest in the citizens and the country
Collecting taxes
Inefficient administration makes it hard to properly to collect income tax
Corporate taxes are low to attract companies
Taxes on imports and exports are easy to collect but relies on foreign trade
Decrease in foreign trade will directly affect revenue
Liberalization of trade due to WTO will decrease tariffs
Informal market
A large informal market will greatly decrease tax revenue
Worker's rights are threatened: possible poor working conditions that are a danger to ones health, unfair pay and exploitation
Lack of good governance and corruption
Corruption
electoral corruption
government unlikely to adopt policies that benefit the electorate
reduction of effectiveness of legal system
buying one's way out of trouble --> incentive to act illegally
unfair allocation of resources
contracts to highest bidder instead of most efficient producer (market failure)
hinders sustainable development
misallocation of resources
Bribes increase costs of business --> higher prices
increased costs: cash & management negotiation time
reduction of trust in economy --> harder to attract foreign investment
Foreign aid would be greater without corruption and it will be used more effectively
increased risk of contrasts not being honoured --> deterrent to investment
public funds diverted to capital projects --> reduction in the quality of government services
blind eye to regulations (including safety, construction and the environment) --> hinders sustainable development
funds often moved abroad (capital flight) --> reduction in internal investment
constant small bribes --> reduction in the economic well being of the ordinary citizen
Unequal political power and status
those in power = more likely to develop policies in their own interest and not in the interests of lower income citizens
(watch/read: Yes, Minister + Yes, Prime Minister)
the 'voice' of low income people may not be adequately represented in government policy
low income people less likely to become involved in political process (lack of background, education, social networks, time)
lack of democracy --> wealthier people often have disproprotionate say
Political instability
prevents formation of a stable government (essential for development)
Foreign investors are afraid to invest/aid as a new government might nationalize industries
lack of structured, effective, long-term government planning
law not enforced --> incentive to act illegally
increase in organised crime and black markets / grey economy
Resources are focused on resolving or fighting the instability rather than policies of development (opportunity cost)
damage to infrastructure (e.g. wars, riots)
loss of life (e.g. wars, riots, political violence, imprisonment)
Gender inequality
Improved and more accessible education
Education children is improved
Well-being of families is improved
Quality of workforce improves
more control over contraception
marry later
smaller families
lower rate of population growth
Women better able to get educated
Total workforce size increased
Households earn more
Production increases
Decreased dependency ratio
Greater empowerment makes women earn more money
increased health levels
Increases in income levels for men