Scarcity is an international problem, affecting all people. According to O’Connor (2004) “scarcity exists because people have unlimited wants or needs, but limited resources to satisfy their material desires” (1). Scarcity can be applied to multiple situations. The inability to access an infinite number of goods directly affects what manufactures can produce. As a result, there are fewer of a specific item that is widely desired. The price of this specific item will reflect the inability to access goods needed to produce more.
In some situations, countries may experience a scarcity in a specific good or product. Ideally, the country will be able to form trade relations with another country in order to supplement the lack of good within the country. O’Connor (2004) further expands on this in noting, “the scarcity of natural resources steers some developing countries toward one-crop economies, the reliance on the production of one or a few primary commodities such as foods, beverages agricultural products or minerals” (299). However, in the event that the country cannot produce the specific good, the economic security of the country is compromised.
Scarcity can further be applied to revenue. When the economy declines, consumers have limited funding. As a result, they tend to purchase less. This process adversely affects the economy as retailers will then begin to decrease the number of employees and goods within the store to reflect consumer demands. Although many nations strategies can be devised in order to limit this process, underdeveloped nations may not have the resources to implement these strategies. This results in negative economic growth for the domestic economy. However, scarcity of money in underdeveloped nations is further problematic. O’Connor (2004) expands on this in noting, “the acceptability of money is derived mainly from its scarcity and the confidence people have in the issuing body, usually a national government” (190). If there is a general lack of confidence in the national body issuing money, other nations may be hesitant to form trade relationships with the underdeveloped country. This directly increases the prospect of scarcity occurring and results in an array of social problems for the people living in that country.
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"Scarcity Definition In Economics".
- O’Connor D.E., The Basics of Economics. New Jersey: McGraw & Hill, 2004. Print.
