When low income countries begin to experience economic growth, they often do so

Question

When low income countries begin to experience economic growth, they often do so at rates much higher than current growth rates of industrial nations. Which of the following does NOT provide an explanation of this phenomenon. A, Developing countries may not need to engage in large amount of R&D as they can borrow technologies that have already been developed in industrial nations. B. Low income countries do not usually have large volumes capital. They can grow from technology improvement and capital investment, without facing diminishing returns until they reach much larger levels of income. C. as industrial countries are growing, they have high levels of capital and face diminishing returns from investment in capital. D.Industrial countries have higher rates of growth in physical capital and developing countries are not able to invent in large quantities of capital.

Explanation / Answer

Option D.Industrial countries have higher rates of growth in physical capital and developing countries are not able to invent in large quantities of capital.

Low income countires my have the above mentioned advantages about readymade technology, gains from increasing returns to scale. but the fact that these countires have problems like infrastructure debt, public debt, poor government may create a capital hungry country.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.