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Date Posted: 1/2/2013 3:06:30 PM

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1) The vicious circle of poverty
The vicious circle of poverty refers to a self-reinforcing situation whereby certain factors exist that tend to perpetuate an undesirable phenomenon. In developing countries, the vicious circle of poverty can be viewed on both the demand side and supply side. The demand side implies the low levels of income lead to low levels of demand which in turn lead to low rate of investment and corresponding lack of capital, low productivity and low income. From a supply side, low productivity implies low income which in turn imply low savings and low level of investment leading to deficiency of capital.

2) Health epidemics such as HIV/AIDS
This s may apply directly due to loss of life or indirectly when a person is sick hence unproductive to the nation hence reduced productivity. This is partly because of inadequate healthy facilities in the developing countries.

3) Corruption and resource mismanagement
This has considerably hampered development as public funds meant for development have sometimes been diverted to private use. Donor funds meant for development have often been mismanaged.
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4) Lack of entrepreneurial skills
Entrepreneurs play a major role in development. Development of entrepreneurial skill may sometimes be hindered by government policies which in trying to maintain a particular social order may deny those with entrepreneurial talent a chance to exercise their talents.

5) Human resource constrains
In many developing countries individuals lack key skill and knowledge required for economic development. Lack of adequate skilled human resource lead to low productivity and factor immobility. This implies that there is low knowledge on alternative production methods, natural resources and opportunities.

6) Inappropriate policies.
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In a bid to develop faster, many developing countries adopt policies that if fully implemented can lead a very fast economic growth, but in most cases, the policies made are over- ambitious hence

un-implementable or end up being partially implemented. This hampers growth as well.
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7) Social-cultural differences
Economic development is affected by social attitudes. Business transactions may be limited among different communities or regions more if they have social and cultural differences as this may inhibit geographical mobility.


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