The Economic Development Of A Country Essay

788 Words Dec 19th, 2014 4 Pages
A country which experiences continuous underdevelopment and is stuck in a low-level equilibrium of capital per worker is one which is in a poverty trap. If this underdevelopment is left unaddressed then there is no possibility of this country escaping this trap. Proven by many countries in East Asia, it is possible through investment to increase economic growth to a higher equilibrium leading to a break from the bad cycle. The problem is however that many private investors have no incentives to invest in these underdeveloped countries as they have many imperfections, which could lead to them receiving little or no returns, countries which receive little investment see little economic development. There is no universal policy which can eradicate every countries problem; each country faces its own binding barriers on its economic growth. Therefore it is paramount that this essay introduces vaguely how the Hausmann-Rodrik-Velasco growth diagnostics framework can be used to target the countries largest barriers to investment due to low social returns and the

It is very hard for a country which is stuck in low income to fix all of their problems, it is more efficient for countries to target certain complementarities in development. This can be done by Using the Hausmann-Rodrik-Velasco growth diagnostics frame work. A Countries low investment level can be due to low economic return to the investor.

Low social returns can be a cause of many factors. A country which is seeking…

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