Posted by : Ahsan Khan Thursday, 22 December 2011


There are many barriers and difficulties in the way of economic development of less developed countries. Development for developing nations is desirable but not achievable due to a lot of hurdles. These obstacles are grouped into the following five categories:
  1. Economic Obstacles
  2. Social Obstacles
  3. Cultural Obstacles
  4. Political Obstacles and
  5. Administrative Obstacles

A.      ECONOMIC OBSTACLES

Some of the main economic obstacles are given below:
1- Deficiency of Capital and Foreign Exchange
There is scarcity of capital and foreign exchange in Pakistan. Lack of capital and foreign exchange are a big hurdle in way of economic development. Per capita income is very low i.e., $ 1095. Low level of per capita income results in low saving and low investment. Domestic saving is just 9.9 % of GDP in Pakistan; it should be 25 % for rapid economic development. Foreign exchange reserves of Pakistan are just $ 15.0 billion. 
2- Vicious Circle of Poverty
According to Ranger Nurkse, vicious circle of poverty is the greatest obstacle in way of economic development. In developing countries there is low income that leads to low saving and low investment. Low level of investment causes low rate of capital formation, which stops the economic development. Rate of capital formation is just 5%.
3- Backward Natural Resources
No doubt, developing countries including Pakistan have rich and many resources. But due to backward state of technology these resources are un-utilized, under-utilized or mis-utilized. So, the improper utilization of natural resources is also a hurdle in the development procedure. Share of natural resources to GDP is less than 1 %.
4- Backward State Technology
Use of backward technology is another problem of economic development.  Due to use of backward technology productivity level of our labour and its efficiency is very low. Productive quality and quantity is also inferior due to use of old means of production. Annual value of productivity of our labour is about $ 100 as compare to the more than $2500 in advanced countries.
5- Inflation
High rate of inflation is also a hurdle in way of economic development. Rate of inflation is 13.3 % in Pakistan. Due to inflation purchasing power of people decreases, their consumption increases and saving decreases. Low saving leads to less investment and a country remains poor and backward.
6- Low Per Capita Income
Per capita income of Pakistan is very low as compared to the rich nations. Low per capita income is due to low level of national income and high rate of population growth. Low per capita income results in low saving and low investment. So, in the economy, capital formation rate is low that is a serious obstacle in way of economic development. Per capita income in Pakistan is $ 1095.
7- Internal and External Debts
To operate some major projects, government has to take loans from national and international resources. These debts and their services charges are increasing day by day. While taking loans from abroad we have to follow the terms and conditions of foreign donors that is the obstacle in our growth and development process. Today, the burden of total public debts is Rs. 8160 billion and an external debt is $ 53.9 billion.
8- Dependence on Agriculture
In Pakistan, about 68% population is living in 46,894 villages. Their main occupation is agriculture that is at backward stage. Old methods of cultivation, less credit facilities, unorganized markets and limited irrigation facilities are factors, which are hurdle in the process of economic development. Total cropped area of Pakistan is 23.8 million hectares which is about 28% of total area.
9- Dualistic Economy
Dualistic economy refers to the huge difference between various economic sectors. There are vast regional and income disparities in Pakistan. There is co-existence of fully advanced and fully backward state of technology in the same sector at the same time. Similarly, population of Pakistan is very rich and very poor; it is also a hurdle in economic development.
10- Deficit Balance of Payment
Pakistan is facing the persistent deficit in its balance of payment since 1947 with the exception of 5 or 6 years. Higher imports volume than exports are an obstacle in way of economic development. At present, imports of Pakistan are $ 25.107 billion, exports are $ 14.162 billion and deficit in balance of payment is $ 10.945 billion in 2009-10.

B.     SOCIAL OBSTACLES

These are the major social obstacles in way of economic development of Pakistan:
11- Illiteracy
Only 57 % population is literate in Pakistan. Due to illiteracy our farmer and industrialists are ignorant. Efficiency and productivity level of our labour is poor due to illiteracy. Use of modern techniques of production is impossible due to illiteracy. Accordingly, illiteracy is a difficulty in way of economic development.
12- Low of Living Standard
Low level of living is a hurdle in the way of economic development. Our population is backward and its growth rate is as high as 2.05 %. Poor population is not provided appropriate facilities to make high standard of life. Low level of living, low income, inadequate housing facilities, poor health etc. are the problems of economic development.
13- Joint Family and Caste system
Joint family system is also one of the main obstacles in the way of economic development. In joint family system all the members of the family do not work. They depend upon one another. Similarly, due to caste system rich and superior class do not work hard. 32.17 % population is working and 67.83 % is depending upon them in Pakistan.
14- Unproductive Expenditure
Most of the expenditure of people is unproductive like expenditure on various rural fairs and festivals. People in developing countries prefer to keep resources in cash form in lockers at home. They invest in real estates and in gold and silver ornaments. These resources can be used for economic development.
15- Consumption Oriented Society
Most of the population of Pakistan is consumption oriented. People have to make huge consumptions due to demonstration effect. Due to posh locality, friends and relatives people have to adjust their consumption styles. Consumption of people is very high due to fulfillment of customs, traditions and habits.
16- Rapidly Rising Population
In developing countries like Pakistan population growth rate is very high i. e., 2.05 %. The rapid backward population growth is also a hurdle in way of economic development. This rapidly increasing population leads to starvation and various social crimes.

C.     CULTURAL OBSTACLES

Cultural obstacles are given below:
17- Customs and Traditions
In developing countries like Pakistan, people spend huge portion of their incomes on customs and traditions. Sometimes they have to take part in the arrangements of rural festivals that reduce their savings. People have to spend more on marriage, birth and death times in our country.
18- Wastage of Resources in Litigations
Legal process is very costly and lengthy in Pakistan. Especially, the large part of our farmer’s income is wasted in litigations. It is wastage of resources and reduction in the rate of saving.
19- Low Participation of Women
Almost 49 % population is female in Pakistan and out of them only 20 % takes an active part in economic activities. These facts are showing a little participation of women in economic activity that is also an obstacle in the way of economic development. Woman labour force is just 10.96 million.
20- Out-flow of the Best Brain
Brain drain is also a problem in way of economic development. In our country, honour, dignity, self-esteem and authorities of qualified person is very low. So, they are bound to go abroad to provide their services for other nations.
21- In-efficient Entrepreneur
Due to illiteracy and lack of training institution in our country entrepreneur is in-efficient. In-efficient entrepreneur is a cause of economic backwardness. Illiterate entrepreneur cannot maintain the proper record of his business to earn maximum profit.

D.     POLITICAL OBSTACLES

These are political obstacles in the way of economic development:
22- Political Instability
There is political instability in Pakistan; the policies of the government are also instable. Due to political instability, rate of economic growth and development remains low in all the sectors of the economy. Investors feel hesitation while making investment if political situation is not stable.
23- Mis-use of Authorities
Mis-use of authorities and powers is a big problem in the way of economic development. Mis-use of authority leads to corruption and nepotism. Accordingly, there is no regard for talented, intelligent and brilliant brain.
24- Insincere Leaders
Politics in Pakistan creates insincere leaders. Political leaders have no interest with the welfare of population but their own interest. In Pakistan rich industrialists join politics to safeguard their industries. The Feudals involve in politics for the sake of status and power.
25- Changes in Fiscal Policy
In developing countries there are frequent changes in fiscal policy. Change in price level and tax rate is a common practice. It is also a hurdle in economic development.

E.     ADMINISTRATIVE OBSTACLES

Following administrative obstacles are problems in the way of economic development:
26- Corruption
In developing countries most of the officers are included in the curse of corruption. Sometimes, they have to make corruption due to any big administrative or political pressure.
27- Favouritism and Nepotism
Nepotism means selection according to relationship, not according to ability. In developing countries like Pakistan, there is favouritism and nepotism, which causes in economic backwardness. Preferences are given to the friends and relatives for the jobs.
28- Lengthy Legal Process
In developing countries law and order and legal process is very lengthy and costly. To obtain social justice, people have to waste their income and time. People have to depend upon the mood of the officer for their work in Pakistan. The official matters and domestic problems are highly inter-related.
29- Mis-use of Authorities
In our country, use of authorities is not reasonable. Officers use their powers for their personal interest. They give first preference to their own benefits and second preference to the public welfare.
30- Law and Order
Improper situation of law and order is also a problem in the way of economic development. Law and order conditions are not satisfactory in case of Pakistan. Here, Chief Justice Iftikhar Muhammad Chohdery was demanding for justice and justice was not provided him for a long time.

Conclusion:
            Economic development in developing countries is facing a lot of problems. It is very difficult to remove all these obstacles but not impossible. Government should adopt self-reliance policy and adopt modern technology to remove these complications.

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