Reinforcement of inappropriate development by privileged classes

Within developing countries the capital is usually held by a small privileged class which is uninterested in investing in ventures conducive to more appropriate forms of development of value to the poor majority. Such capital is rendered unavailable because it is lent to foreign investors, used in speculative ventures or to purchase more land or imported luxuries, or sent out of the country to secure foreign banks.

Scarcities can threaten the incomes of elites that depend on resource extraction. These elites often compete among themselves for shrinking resource rents; they may turn to the state for compensation, or they may act to block institutional reforms that would distribute more fairly the costs of rising scarcity. Scarcities can also aggravate competition among political elites that derive their power from rival political institutions.