Question

1- Discuss some of the features hindering developing countries from growing faster.

2- Describe alternative forms of capital inflow to finance external deficits and explain why these methods were used in different times?

3- Given your personal knowledge and impressions, do you think that technological progress will increase or decrease inequalities? Why? Discuss

Answer 1

1)

Developing countries are characterized by the low economic growth, low saving and low standard of living. Following are factors that hinder growth rate of these countries:

• Low capital base: Saving rates in these countries are significantly low and that hinder the capital investment. These countries are caught in vicious circle of poverty. Low investment and capital base retards the economic growth.
• Political instability: most of developing countries with low growth are politically unstable and democratic forces are absent , these features make these countries less attractive destinations for investment.
• Lack of human resources and skills labor.
• Lack of infrastructure.
• Lack of good governance and rampant corruption.
• Lack of entrepreneurial initiatives.