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Main Reasons for Lack of Incentives to Save/Invest in LDCS

(i) Imperfect maintenance of law and order.

(ii) Political instability.

(iii) Unsettled monetary conditions.

(iv) Lack of continuity in economic life.

(v) The extended family system with its drain on resources.

(vi) Socio-cultural Constraints:
Economic development has much to do with human endowments, social attitudes and historical accidents. In LDCS, institutional factors characterised by rigid stratification of occupations re-enforced by traditional beliefs and values. The people find it difficult to accept new values, created by the impact of innovations.

(vii) Agricultural Constraints:
Agricultural practices are out-dated. The land tenure system is faulty in many LDCS.

(viii) Human Resources Constraints:
Human resources are manifest in low productivity due to shortage of critical skills.

(ix) Foreign Exchange Constraint:
Over exposure of LDCS economies to international fluctuations in the demand for and prices of their products, makes their earnings from these products to be low, and so reduces their capacity to earn foreign currency which is in high demand in LDCS. This in turn, cripples their ability to import their needs.