Risk of capital investment

The risk involved in new economic development at any level, particularly in small rural communities, has grown to overwhelming proportions. Extensive capital is required for land, building, equipment and essential services such as water and sewage, before any production begins. As the readily available resources which brought business to these communities in the past become exhausted they are not replaced by the development of new resources, since the lack of sewage disposal and water systems means no outside development group would seriously consider working in such conditions. Local residents tend to lack the resources or the ability to initiate even small scale enterprises. Industry cannot afford to take risks in ventures that have low market values or low potential rates of return.

The absence of significant net investment by people in traditional societies is due to a lack of any notion of productive accumulation, or even of progress; and to the acceptance of values and institutions which are inimical to innovation. In addition, farmers need some of guarantee that prices will not fall below a minimum remunerative level if they are to be induced to introduce innovations and increase investment on their land. As a result, economic life continues in a repetitive pattern with no underlying tendency for appreciable increase in output.