Constraints on Economic Growth

Constraints on Economic Growth

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  • Created by: smeemi
  • Created on: 26-10-11 11:38

Constraints on Economic Growth

Internal Constraints

  • Rapid population growth - reduces GDP per head.
  • Lack of savings - emergence of a savings gap.
  • Debt servicing
  • Political instability - e.g. Nigeria
  • Corruption - deters potential investors from investment projects.

External Contraints

  • Declining commodity prices due to developments of alternatives.
  • Low levels of foreign direct investment.
  • Terrorism.
  • Volatility of export prices.

Other Contraints

  • Credit markets may be poorly developed due to assymetric information.
  • A lack of fully established property rights is a disincentive to invest.
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