and efficient use of capital and labour resources
- Lead to high level of unemployment and underemployment
Low levels of technological progress and labour productivity
- Low rates of economic growth
- Sourced from the use of labour intensive and traditional methods of agriculture and manufacturing.
High population growth rates
- High dependency ratios and increases the demand for education, health, housing, employment and transport services
- If population growth outstrips economic growth, living standards can fall and increase the incidence of poverty
Demand inflation
- Volume of domestic supply does not satisfy the economy’s level of aggregate demand
- Economic growth and progress in HD will fall if inflation reduces real incomes and misallocates resources
Lack of foreign exchange and high levels of foreign debt
- High debt servicing costs
- CAD are often recorded because of reliance on agriculture and low labour intensive manufactured goods and high dependence on imports of energy and capital goods
Economic dualism
- An urban elite in a formal commercial economy, alongside a traditional rural economy (agriculture)
The ‘demonstration effect’
- Rural peasants migrate to cities for employment
- If unable to find job they live in shanty towns with inadequate water, power, education, health, sanitation, housing and employment.
- Extra demands on public resources and services
Institutional problems
- Corrupt and inefficient governments which undermine domestic and international confidence needed to support and finance the process of economic development
- Traditional cultures can impede the adoption of new technologies

 Effects of globalisation

Integration has led to increased growth in world GDP, trade and financial flows and flows of portfolio and FDI until the GFC.
The globalising economies such as China, India, Malaysia, Brazil and Mexico grew on average by 5% in the 1990s compared to an average of 1.4% per year for...