Six Factors Contributing to Lack of Growth

  1. Political Stability - countries need regularized governmental processes without worries of corruption
  2. Population Growth - Top 10 LDC's have growth rates of 3-4%. With the rule of 72 that means every 20-24 years the country's population DOUBLES! Such growth strains the resources of the country and hampers growth
  3. Property Rights - markets depend on the ability of consumers and producers to work efficiently and with trust. Without belief in ownership nor the incentive to protect your property the market is less efficient. In LDC's where agriculture accounts for 80% of the production, often up to 90% of the land is "collectivized" (or the government own the land and distributes it to citizens). These farmers have no personal stake in improving the land. Irrigation problems and access to water (as an Californian knows) can make or break development.
  4. Illiteracy - LDC's have literacy rates of under 50%! Children are required to work both for wages now and for "retirement" for the older generation later. School is not available even if their labor were not required for economic reasons.
  5. Infrastructure - roads, airports, train lines, ports, and now telephone, cell towers, satellite communications all make goods and services move efficiently and cost effectively. Energy to power all these resources is also crucial. Demand for oil in China to power their factories will outstrip U.S. in next 5 years. LDC's lack these resources to help their markets compete.
  6. Capital - how do you get all these things? INVESTMENT!!! What does this really mean? MONEY! It takes money to make money. You can borrow money to build your infrastructure, create new schools, institute birth control programs.