Question

why so some poor countries remail poor while others transition to middle and high income countries eventually?

Answer 1

Some countries are able to transition from low incomes to high incomes because of the strict expansionary policies taken by them and huge focus on the economic development and growth of their countries. Some reasons are as follows:

1. Boost to the domestic production from government: the government of the poor economies provide support to the domestic industries and companies by infusing capital, providing subsidies, levying import restrictions and also by generating higher demand.  

2. Focus on economic development: the government with the help of international organizations and nations is able to focus on education, healthcare, agriculture, defense and other sectors which lead to improvement in the economic condition of the nations. They infuse capital in these sectors and provide facilities to the public which creates new demand for goods & services, generates employment, and improve the standard of living.

3. Elimination or reduction in terrorism: countries which are poor usually have huge terrorist groups and are camping ground for terrorism. Actions against terrorism lead to reduction in losses and damages to property and lives thereby boosting economic conditions.

4. Foreign relations:  international trade is very important for an economy to grow. International ties and relations with foreign nations boost the trade with them thereby giving rise to demand for goods and services thereby generating income for the nation.

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