Region: Harare semester: 1

other goods. In other words, real capital is the assets used to produce some goods,lack of the real capital is one of the causes of low economic growth in 3
rd world countries , these countries do not have sufficient real capital to engage in investment. This maybe caused by a general lack savings, high interest rates to encourage savings will of course deter investment . Debts also causes a shortage in real capital , ie in the case of public sector funding, funds are often used to repay previous debts for example from World Bank and IMF and this will reduce the available funds for capital investment by government. This problem is referred to as debt overhang . Most third world countries are faced with large public debts and this results in inability of government to inject spending into developing and growth of the economy .Absence of credit markets also lead to lack of real capital that is much needed for the growth of an economy . The absence of these markets discourages both lenders and borrowers credit markets oftenly fails to function effectively because of the extremely high risks associated with lending in developing countries.
Shortages of Human capital labour

Human capital refers to the skills ,experience and knowledge that workers in an economy have, human capital and economic growth are strongly correlated because a knowledgable workforce can lead to an increased productivity . Human capital theory stats that the higher the level of human capital is the higher of performance (WU, T 2013) Human capital investment is crucial to developing countries this is because lack of or inadeaquate human capital causes low economic growth . it is necessary to have skilled labour if an economy is to diversify and move towards industrialisation
Due to lack of human capital in 3
rd world countries there is reduced innovations research and development which will lead to noor limited advancements in technology and creations of new products . If an economy wants toprogress economically it must ensure that its citizens have access to high quality education at affordable prices.
However rise in human capital brings positive change in the economic growth and economic growth rises the process of human capital formation. Rise in human capital is the cause of more economic growth.
Inadequate quality of economic management
Management has become a factor of production for better use of other factors , which acts as both an economic resource as well as system of authority , when there is quality national economic management it will increase the productivity of a countru by better utilisation of existing resources and developepment of system of authourity by framing rules and give them effect. National economics management like minister of finance and minister of development have a great deal of influence on the economic growth of economy,when poor ecomic policies are implimented this will lead to low economic growth. Inorder to ensure strong economic growth , there are 2 main ways that economic activities that is fiscal policy and monetary policies are intended to either slow down or ramp up the speed of economy’s rate of growth . if economic management impliment poor policies this will have a negative impact on productivity and labour force participation, this will lead to reduced GDP per capita and low economic growth . if poor policies are made for instance, if business taxes are too high, it will increase the cost of operating which will inturn lead to shortening aggregate supply.

REFERENCES
1. Choksi A (1987) Liberalising Foreign Trade lessons of experience in the developing world
2. Johnson HG(1971) Aspectsof the theory of Tariffs
3. ZOU (2003) Macrorconomics Module
4. Winters, A. (2004), “Trade Liberalization and Economic Performance
5. Krueger, A. (1998), “Why Trade Liberalisation Is Good For Growth,” The Economic
Journal, vol. 108(450 6. Burnside, C. and D. Dollar (2000), “Aid, Policies, and Growth,” The American
Economic Review, vol. 90(4)