Notion of Scarcity and Effects on Economy

Scarcity is a state of the economy where the available goods, services, or resources are unable to meet all the needs and requirements of the public. It is a case of insufficiency. 

People's requirements are larger than the available resources of the country, or that particular economy.

It is a condition of insufficient stock, insufficient production, and insufficient availability of all resources or funds.

Factors Contributing to Scarcity

• It is geographically situated in a way that it is resourceless by default.
• Lack of technology and mining facilities to unearth the resources and produce the end products.
• Ever-increasing population, with no corresponding improvement in production and services.
• Impact of natural calamities destroying resources and production.
• Lack of efficient planning and management.

So you can see that scarcity of resources is both geographical and man-made. 

It is either a natural element or weakness of that country and may also be due to chaos in their administration.

Solutions to the Problem of Scarcity

If the problem is due to natural elements such as being destined by default to be poor in natural resources, then we may not be able to solve it easily.

The available options are either to import raw materials and resources from other countries and produce finished goods in your country, or to import finished goods directly from there.

You should consider the cost factor to be economical. If the cost of production from importing raw materials and turning them into finished goods is lower or equal to the cost of imported finished goods, then you can opt for importing the raw materials and producing them at your end, as it has the benefit of giving employment to your workforce. 

If, on the other hand, you realize that the cost of importing finished goods is much lower, then you should import the finished goods to tackle the situation.

In case the scarcity is due to reasons other than natural elements:

Given the country's scarce resources, there are many factors that require deep understanding and analysis before identifying and formulating solutions.

• In case of floods, rains, and droughts that destroy stocks and resources, you must consider solutions to tackle the problem. Collecting statistics on the frequency and periodicity of these calamities can help you formulate preventive measures, such as constructing dams and reservoirs, adopting rainwater harvesting and irrigation canal techniques, and building water reservoirs and ponds to store water for off-season use. These measures can help address scarcity to a significant extent.
• If the problem is man-made, such as population growth or congestion in certain areas, scarcity can be addressed by controlling population growth or by increasing the production and supply of goods through transportation and transhipment from other places.
• Inefficiency in management and administration can be resolved through proper training programs and active participation by workers and management to remove bottlenecks.
• Proper cost control studies and analysis can reduce funding problems that may contribute to scarcity if left uncontrolled.

From the above analysis, you can realise that the notion of scarcity is both natural and artificial. Artificial in the sense that it is created due to improper planning and administration and lack of knowledge. 

In some cases, scarcity may be intentionally created through corrupt methods to create black marketeering. 

But normally scarcity can be resolved through better planning and administration. 

Better planning is possible through an in-depth review of all the economic factors prevailing in the relevant environments and through formulating suitable principles and norms for application under particular conditions and situations.