(1) Poverty Cycle: Poverty and inequality are the factors that hold the developing countries from further improvements. People receive little education and almost no health care. Also, because the income is very low, the citizens would have no extra money to invest/save.
Low income levels = Low saving levels = A lack of funds for investment = Lower incomes (The cycle continues.)
- Most of the Ethiopians cannot fulfill the minimum stand of food per day that World Health Organization set. This indicates the poverty level of Ethiopia, and its ever lasting poverty cycle. The difficulties that farmers are facing, such as drought, are discouraging the farmers from increasing their production, which becomes worse as it goes.
(2) Institutional and political factors: There are physical problems (difficulties in reaching rural areas) and data information problems that make collecting tax hard within the country. The property rights are also being insisted on the traditional base, preventing the trades between people.
- Since a majority of the population are devoted to agriculture, most of its population is in the country side. This makes it harder for the government to achieve accurate tax collecting. The property right is also not as clear as that of other countries. Because of its government, people cannot own or trade lands with each other.
(3) International Trade barrier: Developing countries trade with developed economies.They are mainly dependent on primary exports. Diversification has been occuring ever since the trades became active. Developing countries had to increase its primary exports gradually, to satisfy the increasing demand of import. Because of natural disasters, the inelastic supply of primary products alter a lot, which makes the prices unstable. Also, as the developing countries strengthen themselves by trading with one another, poor countries become poorer. Overproduction causes the prices to be unstable. Some producers would be left out, because of the mass producers. Since the production increases, storage would become expensive and hard.
- Ethiopia is the original source of coffee bean, and still has one of the biggest coffee production in the world. Ethiopia is the world 10th livestock producer, which exports gold, leather products, and oil seeds. Recently it started exporting plants and flowers, too. With its newly constructed dams, it started exporting electric power to its neighbor countries, too. Although the country has large mineral sources and potential of oil, because of the unstable government, the resources are not being used efficiently.
(4) International Financial Barriers – indebtedness: A lot of developing countries, similar to the other foreign countries, borrowed money from institutions; however, it became hard for them to repay as the oil crisis occur.
- The government has a public debt, which is 31.7% of the GDP.
(5) Social and Cultural factors:
Religion- Encouraging/discouraging the work force.
Culture/traditions- Modern or Classic? Does it degrade or improve the society?
Gender issues- What’s the role of the women? Equality of opportunity?
- The education of the government is poorly organized, and as a result most of the citizens are illiterate. About 60% of the citizens are Christians, and the rest are either traditional faiths or Muslims. The role of women is still very small in the country, limited to house chores.
——————————————————————————————————————————————————–
The education and the unstable government are still the problems of the country. Because the citizens don’t have any access to higher education, they only limit themselves to agriculture or simple productions. Also, since the government regulate the ownership of lands, people don’t get any opportunity to increase their income. Those two barriers not only prevents the standard of living and GDP from growing, but also decreases the overall growth rate.
