We have already identified the different ways in which economic growth could be achieved. However, developing countries often are prevented from achieving this: Why? Many of the reasons lie with the poverty trap. This shows us that the most significant cause of poverty... is poverty.

 

Attempting to break free of this cycle is almost impossible internally: no one will give you a loan (because you probably won't pay it back), you lack the education to set up an entrepreuring business (lack of human capital) and you can't save as any money you have is put back into surviving. External help is obviously needed. But even then, that's no guarantee.

Let's review our institutional factors or frameworks: how do they become barriers to economic growth? We can now group barriers to growth into different catagories (te IIIS... or 3S!)

1. Institutional Growth Barriers

2. International Trade Barriers

3. International Financial Barriers

4. Socio-cultural Barriers