An institutional framework is the set of rules and organisations an economy runs on: courts, tax offices, banks and property rights.
A weak institutional framework
| Weak part | What goes wrong |
|---|---|
| Legal system | Contracts are not enforced, so firms avoid investing and trading |
| Tax structure | Few pay income tax; little revenue for schools and roads |
| Banking system | Few have accounts, so savings are not lent to firms |
| Property rights | No legal title to land, so it cannot back a loan |
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Society and politics can hold back an economy too.
Gender, governance and power
Gender inequality
Girls leave school early; women are kept from land, credit and paid work. Half the workforce's skills go unused.
Poor governance and corruption
Bribes raise firms' costs; tax and aid money is taken; investors stay away.
Unequal political power
A small group blocks reforms that would share land, schooling or credit.
The points to remember
- Name the barrier, then its link: less investment, lower productivity, fewer services.
- For development, say what happens to health, education and choices.
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Paper 1 asked this in May 2022, as part (a) for 10 marks.
Explain how political and social factors can act as barriers to economic growth and economic development.
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How the 10 marks are given
| Marks | What your answer needs |
|---|---|
| 9–10 | Theory fully explained, terms used correctly all the way through, the diagram included and fully explained |
| 7–8 | Theory explained, terms mostly right, the diagram included and explained |
| 5–6 | Theory partly explained, some terms, the diagram included |
| 1–4 | Theory only described or stated; few relevant terms |