4.9 Barriers to Economic Growth and Economic Development Questionbank

Albania is a country in Southeastern Europe with an estimated population of about 2.8 million in 2022. The Albanian economy has been transitioning from a centrally planned system to a market-based system and has experienced positive real GDP growth in recent years. Tourism is a significant contributor to Albania’s GDP, and the government has intensified efforts to promote the country’s attractions along its Adriatic and Ionian coasts.

In 2022, Albania’s unemployment rate was around 12%, partly due to structural challenges in the economy. The government operates a progressive personal income tax system, with rates ranging from 0% up to 23%. Corporate income tax is set at 15%. Value-added tax (VAT) on most goods and services stands at 20%.

Albania’s trade balance remains negative, as the country’s main exports (textiles, footwear, and mineral fuels) have not kept pace with imports (machinery, food, and manufactured goods). The government has embarked on several infrastructural projects to attract foreign investment and reduce transport costs, including a newly announced US$200 million investment in highways. Economists estimate the marginal propensity to consume (MPC) in Albania to be about 0.8.

Table 1: Selected Macroeconomic Indicators for Albania

Table 2: Tourism Data in Albania (2022)

Economic Dynamics in Angola

Angola, located in southwestern Africa, is one of the continent’s largest oil producers, with over 90% of its exports tied to crude oil. In recent years, its real GDP growth has been volatile, fluctuating between –1.2% and 2.4% annually from 2018 to 2022, reflecting significant dependence on global energy prices. Despite this oil dominance, the Angolan government has embarked on diversification initiatives to stabilize the economy and reduce vulnerability to external shocks.

Inflationary pressures have been a persistent challenge. In 2021, annual inflation reached 22%, eroding household purchasing power, particularly among lower-income groups. The Banco Nacional de Angola has responded with tight monetary policy, raising benchmark interest rates to 20% in 2022 to curb excess liquidity. Meanwhile, high food costs and depreciation of the kwanza (Angola’s currency) continue to push up import prices.

Angola’s external debt stood at approximately US$52 billion by the end of 2022, prompting government measures to manage debt-service obligations. The nation has engaged in negotiations with international organizations to secure favorable terms. While these arrangements have enabled the financing of infrastructure projects, critics argue that the burden of debt repayment poses risks to future fiscal stability.

In the domestic arena, the government introduced targeted subsidies for agricultural inputs such as fertilizer and seeds to incentivize local food production. However, some policymakers and economists question the efficiency of these subsidies, citing the risk of resource misallocation and corruption. At the same time, partial privatization of several state-owned enterprises aims to encourage private sector investment and improve overall productivity.

Beyond the oil sector, Angola’s economy relies on diamonds, fisheries, and agriculture. In 2022, Angola exported approximately US$1.3 billion worth of diamonds, representing a crucial revenue source after oil. To further diversify, the government has prioritized investments in education and health to strengthen human capital, hoping to spur growth in technology-driven and service-based industries. Infrastructure expansion, especially in rural areas, is underway to bridge the urban-rural divide and stimulate market integration.

International trade relationships are also undergoing transformation. While Angola remains an active member of the Organization of the Petroleum Exporting Countries (OPEC), it has recently signed trade facilitation agreements to reduce import tariffs on selected capital goods. This move aims to attract foreign direct investment (FDI) in manufacturing, but concerns persist about local firms’ competitiveness, given power supply challenges and limited access to finance. Angola’s central bank manages the exchange rate of the kwanza, occasionally intervening in currency markets to stabilize fluctuations arising from volatile oil earnings.

Socioeconomic disparities are still evident, with an estimated Gini coefficient of 0.54 in 2021. Although the government has expanded health and education programs, rural communities remain underserved. Youth unemployment, recorded at 28% in 2022, underscores the need for better job creation policies and entrepreneurial support. The success of Angola’s economic reforms will likely hinge on sustained political commitment, effective resource management, and the gradual diversification away from oil-dependence toward a resilient, broad-based economy.

Table 1: Angola’s Selected Macroeconomic Indicators (2018–2022)

Table 2: Private Sector and Export Data for Angola (2018–2022)

ECONOMIC AND SOCIAL DEVELOPMENTS IN BAHRAIN

Bahrain is a small island nation in the Arabian Gulf, known primarily for its petroleum exports, robust financial services sector, and ongoing economic reforms aiming to diversify its economy. Despite its relatively high per-capita income compared to many other countries in the region, concerns over income disparities and pockets of poverty have led policymakers to introduce a variety of measures aimed at achieving inclusive growth.

In 2019, Bahrain’s government launched an initiative to reduce its reliance on crude oil exports, which historically contributed over 70% of total revenue. As of 2022, this share has declined to about 55%, aided by growth in sectors such as tourism, logistics, and information technology. Real GDP growth averaged 4.3% between 2019 and 2022, and inflation remained moderate, hovering around 2.1% in 2022. During the same period, the government also began phasing out universal subsidies on wheat and electricity, replacing them with more targeted assistance programs. Policymakers argue that such targeted subsidies are more effective in reaching low-income groups, while critics fear the resulting price increases may slow consumption.

On the social front, growing awareness about poverty has led to increased attention on improving human capital. Official figures estimate that approximately 7% of Bahrain’s population remains below the national poverty line, a percentage that has shown slow but steady decline over the past decade. Government officials hope to address the “poverty cycle,” where low income leads to low levels of education and productivity, in turn perpetuating poverty across generations. Recent policy discussions also center around improving labor market participation by women, who currently make up only 38% of the total workforce.

Foreign direct investment (FDI) is seen as a catalyst for economic diversification. Since 2020, Bahrain has attracted new investments in financial technology firms, signaling a shift toward knowledge-based industries. However, rising external debt (now at 92% of GDP) has raised concerns about fiscal stability. Analysts note that effective management of government spending, coupled with continued structural reforms, may be critical in maintaining investor confidence.

In terms of international trade, Bahrain is a member of the Gulf Cooperation Council (GCC), benefiting from reduced trade barriers within neighboring countries. The government is also exploring free trade agreements with Asian partners to expand its export base beyond hydrocarbons. Some local producers, however, express concerns that sudden liberalization of trade could expose them to greater competition, especially in agricultural outputs.

Bahrain’s Vision 2030 plan places strong emphasis on human development and social welfare. Education funding has grown by 5% annually over the last three years, and new vocational programs aim to upskill workers to meet private sector needs. The government has also introduced a modest value-added tax (VAT) of 5% on luxury goods, hoping that it will generate additional revenue without placing too much burden on low-income households.

Despite these efforts, income inequality persists, reflected in a Gini coefficient estimated at 0.39 in 2022. Policymakers believe continued refinements in subsidy targeting, investment in health-care and education, and support for small and medium-sized enterprises (SMEs) will be key in reducing inequality. Critics, however, argue that infrastructural spending particularly on large-scale projects risks diverting funds away from social programs needed to tackle persistent poverty.

The government acknowledges that more inclusive policies are necessary to ensure that marginalized groups share in the benefits of economic growth. As part of its efforts, authorities are discussing the possibility of introducing small-scale microfinance schemes to foster entrepreneurship among low-income communities. Whether these measures will be sufficient to break the cycle of poverty depends on the ongoing balance between encouraging private sector investment and providing a safety net for the most vulnerable.

Below are two sets of data reflecting Bahrain’s macroeconomic indicators and social development indicators, which inform much of the current debate on how best to achieve sustainable growth with equity.

Table 1: Bahrain’s Selected Macroeconomic Indicators (2019–2022)

Table 2: Poverty and Development Indicators for Bahrain

Economic Developments and Challenges in Ethiopia

Ethiopia, located in the Horn of Africa, has undergone rapid economic transformation in recent years. From 2015 to 2022, the country’s real GDP growth averaged approximately 7.5% per annum, largely driven by an expansion in the services sector and increased investment in infrastructure. Coffee remains Ethiopia’s largest export commodity, accounting for about 25% of total export earnings. Yet, recurring droughts, coupled with a high population growth rate of nearly 2.7% per year, have heightened concerns about food security and rural poverty.

Government programs, such as the Growth and Transformation Plans (GTP I and GTP II), have prioritized industrialization, infrastructure development, and agricultural modernization. Although these programs stimulated some growth in the manufacturing sector, limited foreign currency reserves and inflationary pressures have posed major challenges. Ethiopia’s inflation rate peaked at around 35% in 2021 due to a combination of supply shocks, global commodity price increases, and expansionary monetary policy. The National Bank of Ethiopia has since adopted tighter monetary measures to reduce inflation. However, small businesses complain that tighter credit availability hinders their operations.

Despite sustained growth, Ethiopia’s Human Development Index (HDI) remains relatively low, indicative of widespread poverty and inequality. An estimated 22% of the population lives below the national poverty line, while rural areas struggle with underemployment and limited access to clean water. The government has attempted to address these issues through rural electrification programs, improvements in primary education, and targeted social protection schemes. Nevertheless, inequality persists, and rising urban living costs make life difficult for low-skilled workers in cities. Furthermore, frequent currency devaluations have increased the cost of imported inputs for domestic industries, prompting calls for greater export diversification beyond coffee and traditional agricultural products.

Ethiopia has also sought to enhance its global economic integration by reducing tariffs on specific manufacturing inputs and negotiating free trade agreements within regional blocs. These efforts, officials argue, accelerate the country’s transition from a largely agrarian economy to a more diversified one, while attracting foreign direct investment (FDI) into industrial parks. However, bureaucratic bottlenecks and limited infrastructure in some regions—especially inadequate road and rail networks—remain obstacles to realizing Ethiopia’s transformative goals.

Table 1: Selected Macroeconomic Indicators (2018–2021)

Table 2: Poverty Indicators and Development Measures

ECONOMIC REALITIES AND POLICIES IN BANGLADESH

Bangladesh is a rapidly developing country in South Asia, recognized for its thriving ready-made garment (RMG) industry, which accounts for over 80% of export earnings. Government reforms since the early 2000s, aimed at boosting export competitiveness, have led to steady gains in real GDP. For instance, between 2019 and 2022, Bangladesh’s real GDP growth averaged 5.2% annually. However, persistent challenges such as high rural poverty rates (officially at 20.1%, with extreme poverty at 10.5%) and vulnerability to climate risks continue to threaten inclusive growth.

Remittances form a major pillar of the economy, totaling over US$24 billion in 2021. Inflows from the Bangladeshi diaspora support household consumption and reduce external vulnerabilities, contributing to the country’s foreign currency reserves. Even so, the government has been concerned about maintaining exchange rate stability, especially in light of global inflationary pressures and supply chain disruptions, which have driven up the cost of essential imports like fuel and machinery. To cope with rising expenditures on food and energy, the government raised tariffs on luxury goods while restricting administrative barriers for essential commodity imports.

On the microeconomic front, the government recently introduced a consumption tax on sweetened beverages to curb rapidly rising obesity rates. Local bottlers initially protested the policy, arguing it would reduce their profits and force layoffs in urban factories. Yet public health advocates insist that the potential long-term social benefits reduced health-care costs and a healthier workforce outweigh the short-term economic costs. Meanwhile, targeted subsidies on fertilizers aim to support agricultural productivity; farmers in the northern regions have long claimed that lack of affordable inputs restricts their ability to increase crop yields and incomes.

Bangladesh’s push for infrastructure improvements particularly in roads, ports, and energy has attracted modest but growing foreign direct investment (FDI), totaling around US$2.8 billion in 2022. Corporate tax incentives are given to firms that establish manufacturing plants in special economic zones, spurring output in electronics and pharmaceuticals. Yet the domestic labor force often lacks specialized skills, leading to high underemployment. The government’s Skills for Employment Initiative, launched in 2020, aims to address these gaps by providing technical training and apprenticeships to youths aged 18–30.

Concurrently, there are ongoing debates on reducing import tariffs further to encourage greater participation in regional trade blocs. Economists highlight that a more liberalized trade environment can improve access to cheaper raw materials for local industries. Critics, however, worry that swiftly removing tariffs might destabilize nascent domestic firms already grappling with competition from established foreign producers.

Bangladesh faces significant environmental and developmental hurdles. Climate change-related floods frequently destroy crops, thereby exacerbating rural poverty. Government officials have begun working with international donors to finance climate-resilient infrastructure elevated roads and flood barriers while also supporting microfinance programs targeted at poor households. These policies seek to break the vicious cycle of poverty, whereby low incomes lead to low investments in education and productivity, perpetuating underdevelopment. Early signs suggest that expanded access to small loans, particularly for female entrepreneurs, is reducing extreme poverty in several flood-prone districts.

Despite these efforts, inequalities persist. In urban areas, the Gini coefficient remains relatively high, reflecting income gaps within the service sector. Doctors and engineers earn significantly above the national average, boosting demand for private education that many poor households cannot afford. The government has tried to bridge this inequality by directing additional funds to public schools, focusing on science and technology curricula.

The prospects for Bangladesh hinge on effective policy coordination. Balancing short-term macroeconomic stability such as keeping inflation below 8% with long-term structural reforms in education, infrastructure, and trade policy remains a central challenge. The government’s ability to manage environmental risks, attract investment, and provide social protection will greatly influence whether Bangladesh can transition from a lower-middle-income to a higher-income country in the coming decades.

Table 1: Selected Macroeconomic Indicators for Bangladesh (2019–2022)

Table 2: Development and Social Indicators for Bangladesh

Greece’s Economic Recovery Challenges

Greece, situated in Southeastern Europe, is a member of the European Union (EU) and the Eurozone. The country has long relied on tourism, shipping, and agriculture as key contributors to its economy. Over the past decade, Greece has implemented significant economic reforms in collaboration with international organizations to address high public debt levels and modernize its economic structure. While progress has been made in improving macroeconomic stability, challenges persist, including unemployment, income inequality, and persistent pockets of poverty.

Recent data indicates that Greece’s public debt hovers around 180% of its GDP, reflecting many years of high government borrowing and subsequent bailout agreements. A portion of government spending is directed toward subsidies on basic goods such as electricity and certain food staples to support low-income households. Nevertheless, critics argue that some subsidies are not well-targeted, occasionally benefitting higher-income groups. The official unemployment rate had declined to 11.5% by the end of 2022 from more severe levels above 20% a few years ago, yet youth unemployment remains elevated at about 24%.

In microeconomic terms, the government recently proposed increasing the national minimum wage by 5% to address wage stagnation and boost consumption. Small and medium-sized enterprises (SMEs) are concerned about possible higher labor costs, but government officials believe that stronger domestic consumption could lead to increased revenue for businesses. Meanwhile, the shipping sector remains a cornerstone of Greece’s export revenue, with over 17% of global shipping capacity estimated to be Greek-owned. Tourism also plays a crucial role, accounting for roughly one-fifth of employment, especially on the islands. In 2022, Greece welcomed 27 million international visitors, contributing to sustained demand for the euro in foreign exchange markets.

Despite these positives, poverty remains a pressing issue. According to a government report, around 13% of the Greek population lives below the national poverty line, with limited access to quality education and health-care. Rural areas often face inadequate infrastructure, limiting people’s opportunity to break the cycle of poverty. In response, local authorities, in partnership with the EU, have earmarked funds to improve educational outcomes, particularly in disadvantaged communities.

External trade is another dynamic area for Greece. Although the country’s current account deficit has narrowed, administrative barriers sometimes hamper further export diversification. Foreign direct investment (FDI) flows have been volatile since 2020 but showed signs of recovery in late 2022, especially in the tourism infrastructure and renewable energy sectors. Policymakers argue that consistent structural reforms, including more flexible labor markets and enhanced regulatory transparency, are crucial for sustaining investors’ interest and fueling long-term economic growth.

In the long run, Greece’s economic strategy focuses on reducing public debt, supporting targeted subsidies for vulnerable groups, and encouraging investment in key sectors like tourism, shipping, and renewable energy. The government also hopes that improvements in education and health-care especially in remote areas will address human capital deficiencies and weaken the persistently high poverty rate. The success of these policies will depend on the country’s ability to balance its short-term priorities (such as unemployment reduction and consumer protection) with long-term fiscal sustainability and structural transformation.

Below are two tables providing selected economic and social indicators for Greece:

Table 1: Greece’s Selected Macroeconomic Indicators (2019–2022)

Table 2: Development and Social Indicators for Greece

Italy is the third-largest economy in the Eurozone, with one of the highest levels of public debt in the world (approximately 150 % of GDP in 2021). Despite having a diversified manufacturing sector and being one of the world’s largest wine exporters, Italy has faced persistent challenges, including relatively low growth, high structural unemployment, and regional disparities between the more industrialized North and the agricultural South.

According to the World Bank, Italy’s real GDP grew by 3.9 % in 2022, following a rebound in economic activity after significant pandemic-related contractions. Tourism accounts for about 13 % of GDP, while wine exports, led by regions such as Veneto and Tuscany, play a significant role in the country’s trade balance. However, youth unemployment remains high, and income inequality, measured by the Gini coefficient, remains a concern for policymakers.

Tble 1: Selected Macroeconomic Indicators of Italy (2019–2022)

Table 2: Distribution of Income in Italy by Quintile (estimates for 2022)

Italy’s fiscal policy is characterized by a progressive income tax system, where the tax rate increases with higher incomes. Meanwhile, corporations face an average of 24 % corporate tax. The government has struggled to foster high-growth rates due to constrained public finances and the need to manage its large debt burden.

Table 3: Market for Italian Wine Exports (2022)

Producers of Italian wine benefit from strong demand in foreign markets. However, increasing global concerns about inflation and supply chain disruptions have impacted production costs, especially for small wineries. The table above shows data for two different price points in the export market for Italian wine.

Economic and Social Developments in Hong Kong

Hong Kong is an international financial center located on the southern coast of China. Renowned for its open trading environment and large foreign exchange reserves, Hong Kong has historically pursued free-market policies to spur economic growth. However, recent challenges, including sluggish global demand and ongoing demographic shifts, have contributed to concerns about rising income inequality and persistent poverty. The government reports that 15.8% of the population (over 1.1 million people) live below the official poverty line, which is defined relative to median household income. In addition, Hong Kong’s Gini coefficient remains among the highest in developed economies, at around 0.539 in 2021.

Hong Kong’s role as an entrepôt for Chinese exports and as a major financial hub has driven its economic growth over several decades. Services make up close to 93% of GDP, while manufacturing accounts for only 1% of GDP. The region’s unemployment rate has typically been low, hovering around 2.9% in normal times. However, certain sectors particularly tourism and hospitality experienced a downturn due to global movements in travel restrictions and changing consumer behavior. This contributed to a slight pick-up in the overall unemployment rate to 4.7% by 2021.

The government maintains a near-balanced budget, attributable in part to revenue sources such as profits tax, stamp duties on real estate transactions, and land lease sales. Nevertheless, there is growing debate on whether Hong Kong’s minimal social welfare spending is sufficient to address structural poverty. Some argue that targeted subsidies and cash transfers are needed to prevent low-income households, especially the elderly, from slipping into deeper poverty. Indeed, the government launched a pilot scheme in 2020 offering housing vouchers to households below 60% of median income, claiming initial success in reducing homelessness by 15%.

Hong Kong also faces macroeconomic challenges. Real GDP growth decelerated from 3.0% in 2018 to -1.2% in 2019, before contracting again in 2020 due to global economic disruptions. By 2021, real GDP marked a modest recovery of 2.5%. Inflation remained relatively low, averaging 1.6% in 2021, owing partly to subdued consumer demand. At the same time, the Hong Kong Monetary Authority (HKMA) employs a currency board system pegging the Hong Kong dollar to the US dollar, which limits the use of independent monetary policy instruments.

In response to developmental concerns, the government has initiated programs focused on skill enhancement and vocational training to prevent the formation of a “poverty cycle,” where poor access to education and health-care perpetuates low wages and limited economic mobility. A new Child Development Fund aims to provide means-tested asset-building accounts for underserved youth, while strong emphasis is also being placed on technology upskilling and English language proficiency to enhance employability in service-oriented sectors.

Despite these measures, Hong Kong’s open economy leaves it exposed to global trade fluctuations. Exporters face falling demand from some of Hong Kong’s key markets, even as rising regional competition for port and logistics services puts additional pressure on trade revenues. On the other hand, foreign direct investment (FDI) inflows rose to HKD 1.1 trillion in 2021, reflecting sustained investor confidence in Hong Kong’s legal framework and financial markets. Policymakers must navigate a tight balance between preserving Hong Kong’s “small government, big market” tradition and addressing socioeconomic gaps that threaten long-term development.

Below are selected data illustrating the economy’s performance and its social challenges.

Table 1: Hong Kong’s Selected Macroeconomic Indicators (2018–2021)

Table 2: Poverty and Development Indicators for Hong Kong