Question

1.In what specific ways does widespread corruption aggravate the problem of underdevelopment, preventing economic takeoffs?

2.In what specific ways does the lack of protection for property rights and the sanctity of contracts aggravate the problem of underdevelopment, preventing economic takeoffs?

Answer 1

1- Widespread corruption aggravate the problem of underdevelopment ,preventing economic growth in the following ways-

1- low quality of education and healthcare- corruption in a country means the investments are not used for social cause or for tge benefit of the people.moreover ,education is not provided equally and even healthfacilities are not provided properly .

2- illegal activities-

Corruption means the existence of illegal activities which can be explained as unreported income from the production of legal goods and services for which taxes should be paid.

3- distorting business activity-

Business activity totally ruined due to corruption as only corrupted organisations get the benefit as they had black money and the firms that work hard and work for social benefit are discouraged.

4- reduces investment-

Corruption means uneven distribution of wealth ..which means the wealth is in few hands which result in less investment and hinders the functioning of institution

5-less trust in public sector-

corruption reduces the trust in public sector as the taxes paid are wastes and poor quality of services are provided.

2- meaning of property rights- these are the resources that can be owned by the individual,govt.,collectives or associations which helps in determining how a resource is used.

Property rights are important as these rights allow landowners to travel from their land for employment.these rights are linked with economic prosperity.it helps in allocating resources efficiently and expaning wealth creating opportunities.

Meaning of sanctity of contract- its a contract under which once parties entered ,tgey must honour their obligations under that contract.

Lack of property rights and sanctity of contracts aggravate the problem of under development preventing econonic takeoff in the following ways-

1- less effecient market-

The markets are less effecient as the rights to property are not given ...if in case the rights are given to producers and consumers,then they have the rights of ownershipof tge resources exchanged.

2- over exploitation and misuse of resource- when property rights are not assigned it leads to reduction in effectiveness of market in term of allocation ,pricing and rationing of there resources.

3- encourage opportunitism

These lack of property rights and sanvtity of contract increases oppotunism as grouos or individuals exploit the lack of private ownership.as price mechanism is less effective it encourages oppotunism.

4- over use of resources-

As the resources are scarce and due to the lsck of these rights it leads to over use of resources such as over fishing,depletion of rain forest ,traffic conjestion etc.

5- limited development-

All the problems simply indicate low development as we all know resources are scarce and due to the absence of property rights and sanctity of contract leads to limited development.