What are some obstacles to economic growth in developing nations?
There are many obstacles to economic growth in developing countries. Let us look at a few of them.
Governmental problems. Governments in developing countries can often be corrupt. They can act in ways that enrich only a few of the elite members of society without helping the population as whole. They can be very unpredictable as well. This can scare off foreign investors.
Cultural issues. Some scholars argue that some countries lack the right culture for economic development. Their people might not want to take risks in order to start new businesses. Their people might feel that traditional cultural duties are more important than showing up to work every day. These sorts of cultural issues can slow a country’s growth.
Foreign debt. Sometimes, countries have to take actions that they do not want to take because they need to pay off their creditors. They might have to do things that bring money in the short term even if that hurts their ability to invest for the long term.
Lack of human resources. This may be a type of governmental problem. Many developing countries lack the educational infrastructure needed to develop a workforce that could support a more modern economy.
Foreign competition. Developing countries have to compete against companies from the developed world. This can be very difficult. It can force developing countries to stay with making low value-added products using cheap labor instead of becoming more modernized.
All of these factors (and more) can hinder developing countries’ economic growth.