Question

Why are some countries today much poorer than other countries? Are today’s poor countries destined to always be poorer than today’s rich countries? If so, explain why. If not, explain how today’s poor countries can catch or even pass today’s rich countries.

Answer 1

Today, some countries are much poorer than other countries. A country is poor because its is poor. There are many factors exist in poor countries which makes them always in a state of poor . It includes low level of living reflected in form of low income, poverty, poor health ,inadequate housing etc, high degree of economic inequality,deficiency of capital makes the countries to adopt labor intensive techniques , higher structural and disguised unemployment, exports of primary products and imports of manufacturing products that will lead to deterioration of their terms of trade , technological backwardness ,vicious circle of poverty , low productivity etc. Poor countries are very much grip of vicious circle of poverty. The social and economic factors of poor nations act and react up on one another in such a manner that the poor economies continue to be in a state of development. Therefore, still some countries are poorer than other countries in the world. . No, poor countries are not destined to always be poorer than today's rich countries. A higher minimum quantum of investment is required for poor countries to catch up with today 's rich countries. High quantum of investment will enlarge the market of poor countries. As a result, higher level of investment can be occurred in different sectors of economy. Higher investments leads to higher productivity. As a result , higher external economies will occur . Higher investment leads to higher production and output level and as a result employment rate will rise. Thereby income level of workers increases.It will increase consumption level in the economy. Aggregate demand and aggregate supply will increase. Thereby real GDP of poor economies will increase. Then they can achieve economic growth and develop and slowly they can catch up with richer countries