Problems faced by Developing Countries
1. Unemployment
- It increases government spending on unemployment benefits
- It reduces government revenue from income tax
- It reduces economic output and reduces living standard
- It increases social cost and crimes
- It leads to loss of skills of labour
- It leads to loss of morale
- It leads to lost output
- It leads to poverty
2. Higher population growth
- It requires a higher government expenditure on infrastructure and basic facilities
- It makes the resources more scarce
- There is a greater chance for increased poverty
- It encourages the production of more consumer goods at the expense of capital goods
- It leads to social problems like overcrowding and congestion
- It is embedded with mass unemployment
- It pulls up the price level
3. Congestion, social problems and terrorism
- It increases social cost
- It discourages Foreign Direct Investment (FDI)
- It leads to lost of prestige
- It reduces export (especially services like tourism)
- It leads to a wastage of human resource
4. Natural calamities (such as Tsunamis)
- It leads to unnecessary duplication of works
- It destroys natural resources
- It reduces economic growth
- It requires more resources and time for reconstruction
- It immediately requires more capital
5. Lack of Foreign Direct Investment and grants
- It reduces economic growth
- It reduces employment opportunities
- It requires heavy local investment
