Dangers (problems) of a large subsistence sector
- It leads to low government revenue. This is because it is associated with a narrow tax base due to limited production activities. This makes it difficult for the government to realize the planned revenue required to provide the social services to the people.
- It leads to poor standards of living for the people. This is because it is associated with the production of poor quality output. .
- It leads to low levels foreign exchange earnings for the country. This is due to lack of production of goods and services for export purposes.
- It encourages under employment and disguised unemployment. This because the sector mainly operates at excess capacity and on a small scale with limited production activities.
- It leads to low levels of economic growth. This is due to the production of limited output due to underutilization of resources. “
- It discourages hard work and expansion of production due to absence of profit motive.
- It discourages the monetization of the economy due to use of barter system of exchange. This limits trade in the economy
- It limits the productivity of labour. This is due to use of backward technology which leads to production of low output. .
- It leads to poor social and economic infrastructure in form of poor roads, limited hospitals, limited financial institutions and other communication facilities. This makes it difficult to carry out trade
- It promotes conservatism and cultural backwardness. This encourages cultural dualism in the economy.
- There is lack of specialization under the subsistence sector. This limits production and its associated positive effects like increased efficiency in production.
- There is existence of higher risks under the subsistence sector due to over dependency on nature. This leads to great losses and fluctuations in the levels of output and consumption.
CATEGORIES Economics
TAGS Dr. Bbosa Science
