Barriers to Economic Growth and/or Economic Development · Paper 1 — Free Economics HL Practice Questions

Country X is a low-income developing nation where $70\%$ of the population works in subsistence agriculture. The government has recently discovered significant oil reserves. However, due to a lack of infrastructure, skilled labour, and a weak legal system, international oil companies are hesitant to invest. The government is considering using foreign aid to build roads and schools, but critics argue this will increase the country's debt burden without guaranteeing long-term development.

Country Y is a landlocked developing nation in Sub-Saharan Africa. Its adult literacy rate is $45\%$ and its infant mortality rate is $78$ per $1{,}000$ live births. The government spends $25\%$ of its budget servicing external debt, severely limiting expenditure on health and education. A UN report identifies high levels of corruption as a further factor diverting resources away from public services.

Country Z is a small island developing state. Its economy relies heavily on tourism and fishing. In recent years, rising sea levels have damaged coastal infrastructure, and more frequent tropical storms have disrupted the tourist season. The government lacks the financial resources to build sea walls or relocate communities. The World Bank has classified Country Z as having "low economic resilience."