Question

How can poor countries achieve economic growth?

Answer 1

Most of the poor countries suffer the slow or negative economic growth. This is mainly resulted due to lack of technological development or innovation, increased poverty, greater expenditure spent on healthcare services or dependency on the natural resources rather than producing the finished products and exporting it to other countries.

If a poor country wants to have an increased economic growth, then it must, first of all, adopt the various policies which can help it to reduce the poverty level in the country. The country must focus on developing its manpower, technological and physical capital. As in the poor countries, most of the revenue is spent on improving the products from other countries thus these countries must focus on developing the production capabilities within the economy. For this, they should invest more funds in R&D and innovations.

Free trade and removing the hindrances in the path of a market economy can also benefit these countries as due to free trade more investment will inflow to the country and thus making the economy more viable and improves job opportunities will be provided to the citizen reducing the unemployment and thus poverty level.

Apart from this, the countries must focus on creating processed products rather than exporting raw material to other as the price of processed products is more than the raw material. This will help the economy to earn foreign exchanges. The work productivity should also be increased and labour force must be developed and trained on new technology.