External shocks can hinder economic progress from "summary" of Theory of Economic Growth by W. Arthur Lewis
External shocks such as natural disasters, political instability, or sudden changes in global markets can significantly disrupt the trajectory of a country's economic growth. These unforeseen events can throw a wrench into carefully laid plans and strategies, leading to a slowdown or even a contraction in economic activity. The impact of external shocks on economic progress can be particularly severe for developing countries that may already be facing numerous challenges in their quest for growth and development. These countries often have limited resources and institutional capacity to effectively mitigate the negative effects of external shocks, making them more vulnerable to economic downturns. When an external shock hits, it can lead to a decline in key economic indicators such as GDP growth, investment levels, and employment rates. This can have a ripple effect throughout the economy, causing businesses to scale back production, consumers to cut back on spending, and investors to become more risk-averse. In addition to the immediate economic consequences, external shocks can also have long-lasting effects on a country's growth prospects. For example, a natural disaster could destroy critical infrastructure, making it difficult for the economy to recover and grow in the future. Similarly, political instability can create an environment of uncertainty and deter foreign investment, further hampering economic progress. In order to build resilience against external shocks, countries must have robust economic policies in place that can help cushion the impact of unforeseen events. This may involve building up foreign exchange reserves, diversifying the economy, and strengthening institutions that can respond quickly and effectively to crises.- External shocks are a reality that every country must contend with in the pursuit of economic growth. While it may be impossible to completely eliminate the risk of external shocks, countries can take proactive measures to minimize their impact and ensure that their economic progress remains on track.
