1. World problems
  2. Inadequacy of the domestic market

Inadequacy of the domestic market

  • Uneconomic size of domestic markets
  • Inadequacy of domestic commercial sectors

Nature

The development of domestic industry depends very largely upon the size of the local market, but this in turn, though ultimately a function of the national income and its distribution, depends partly upon machinery for taking the product to the potential consumer. The effectiveness of this distributive organization is one measure of the adequacy of the economic framework. Where the commercial sector is poorly equipped to handle the output of local factories, the absorptive capacity of even the small domestic market is not fully realized. Inadequacy of the commercial sector not only reduces the size of the accessible market and throws the burden of carrying stocks of finished goods and organizing their distribution, at least partly, onto the factory; but it also magnifies problems of supply, making it necessary for the producer to maintain larger stocks of raw materials and consumable stores than would be required if ordinary trade channels were more effective.

Increased stocks – and the consequent increase in costs – are also a factor in the organization of equipment and machinery, for the lack of repair facilities and ancillary industries in the under-developed country may render it necessary to carry more spares and replacements than would otherwise be required and, in some cases, to install standby plants in order to assure continuous production or at least avoid unduly long breakdown delays.

Low per capita national income is one of the principal attributes of less developed countries. Low personal incomes, in turn, are reflected in a pattern of expenditure which is very unfavourable to secondary industry; in general, the lower the income the higher is the proportion spent on food, much of which is unprocessed. It is only as income rises that a market for manufactured products is created. This is one of the ways in which the process of industrialization, when soundly conceived and executed, tends to be cumulative: the higher incomes which flow from new investment and employment are among the principal elements of an expanded demand for manufactures. Nevertheless, many under-developed countries are too small – quite apart from income levels – to be able to sustain factories of economic size in more than one or two segments of secondary industry. The attainable level and patterns of industrialization in such countries are obviously limited.

Incidence

The following least developed countries are reported to have a negative annual growth rate per capita GDP, 1980-85; (Africa) Burkina Faso, Central African Rep, Chad, Djibouti, Ethiopia, Gambia, Guinea, Lesotho, Malawi, Mali, Mauritania, Niger, Sao Tome-Principe, Sudan, Tanzania UR, Togo; (America) Haiti; (Asia) Yemen.

Claim

The inadequacy of the domestic market is a critical issue that stifles economic growth and innovation. When local markets fail to meet consumer needs, businesses struggle to thrive, leading to job losses and diminished competitiveness. This stagnation not only hampers individual prosperity but also weakens the overall economy. We must urgently address these deficiencies to foster a vibrant marketplace that empowers entrepreneurs, supports sustainable development, and ultimately enhances the quality of life for all citizens.This information has been generated by artificial intelligence.

Counter-claim

The notion that the inadequacy of the domestic market is a pressing issue is vastly overstated. In a globalized economy, businesses can thrive by tapping into international markets, rendering domestic limitations irrelevant. Innovation and adaptability drive success, not the constraints of local demand. Focusing on perceived inadequacies distracts from the real opportunities for growth and expansion. Instead of lamenting domestic shortcomings, we should embrace the vast potential that lies beyond our borders.This information has been generated by artificial intelligence.

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Value

Uneconomic
Yet to rate
Inadequacy
Yet to rate

SDG

Sustainable Development Goal #8: Decent Work and Economic GrowthSustainable Development Goal #12: Responsible Consumption and Production

Metadata

Database
World problems
Type
(D) Detailed problems
Biological classification
N/A
Subject
  • Commerce » Commerce
  • Commerce » Market
  • Economics » Economic
  • Societal problems » Inadequacy
  • Content quality
    Presentable
     Presentable
    Language
    English
    1A4N
    D0928
    DOCID
    11409280
    D7NID
    137636
    Last update
    Nov 7, 2022