Economic Consequences of Credit Market Failure in Uganda Assignment

Economic Consequences of Credit Market Failure in Uganda - Assignment Example Its influence is becoming increasingly pervasive through a constant series of federal court decisions as well as steady enlargement in the size and scope of administering agencies. "The failure of formal credit institutions to serve the poor is due to a combination of high risks, high costs and consequently low returns associated with such business." (Orkut et al. 2004:5) Despite the pressure from the International agencies and Governments of the developed nations it will neither fruitful for the economy of the developing countries nor for the consumers of these countries to implement terms and conditions of lending and borrowing as applied in the developed countries. Factors contributing to this argument are many and varied, which include: Difference in economic conditions. Difference in technology and skills. Dependence economies of both the countries on Labour intensive industries. Loss of competitive advantage in international trade. The economy of Uganda is considered as one of the fastest growing economy in the African countries. The growth in the Gross domestic Product of Uganda has reached to 6.9%per year from 2.9% in the era of 1980s according to World Bank. (World Bank 2004:183) As a consequence of this growth,Appleton (2001:4)has estimated,based on household surveys,that the poverty headcount (defined relative to a poverty line close to the widely used dollar a day)has declined substantially:From 56%in 1992 to 34%in 1999/2000 - mainly because mean consumption per adult equivalent rose by 4.7%%per annum over this period (its distribution worsened slightly).Wider measures of poverty (the poverty gap ratio P1 and the poverty severity ratio P2)declined even more tha n the poverty headcount ratio (P0),thus indicating that the...This responsibility is being increasingly codified in law and various governmental orders. Its influence is becoming increasingly pervasive through a constant series of federal court decisions as well as steady enlargement in the size and scope of administering agencies. Despite the pressure from the International agencies and Governments of the developed nations it will neither fruitful for the economy of the developing countries nor for the consumers of these countries to implement terms and conditions of lending and borrowing as applied in the developed countries. The economy of Uganda is considered as one of the fastest growing economy in the African countries. The growth in the Gross domestic Product of Uganda has reached to 6.9%per year from 2.9% in the era of 1980s according to World Bank. (World Bank 2004:183) a. Competitive advantage: For the labour intensive economies like Uganda the competitive advantage heavily relies on the low cost of labour. In the countries like Uganda where most of the population of the country is leading their life below the poverty line it sometimes become inevitable for the consumers to make their child work so that they can get the basic necessities of life i.e. food, shelter and clothing.