Suggest remedies to overcome the obstacles coming in the way of economic development of Rajasthan.
Answers
Explanation:
The pace of development can be slowed down, or even reversed, by various factors affecting the economy. Some of these constraints can be dealt with through economic and social policy, while others may be difficult to resolve.
The constraints on development include:
Inefficiencies within the micro-economy.
Imbalances in the structure of the economy.
A rapidly growing or declining population.
Lack of financial capital.
Lack of human capital.
Poor governance and corruption.
Missing markets.
Over-exploitation of environmental capital.
Barriers to trade.
Inefficiency
Productive inefficiency
Producers in less developed countries may not be able to produce at the lowest possible average cost. This may be because of the failure to apply technology to production, using obsolete technology, or because of the inability to achieve economies of scale. Opening up the economy to free trade may help reduce this type of inefficiency, and encourage technology transfer.
Allocative inefficiency
When developing economies remain closed to competition, when they are dominated by local monopolies, or when production is in the hands of the state, prices might not reflect the marginal cost of production. Opening up the economy to free trade, and privatisation of industry may help promote a more competitive environment, and reduce allocatively inefficiency.
‘X’ Inefficiency
X inefficiency can arise when there is a lack of competition in a market. It is primarily associated with inefficient management, where average cost is above its minimum. Competition is limited in many developing economies, and resources are often allocated by government. This means that inefficient management is common.