In this article we will discuss about the sources of foreign savings. Since most LDCs have low per capita incomes, they are unable to save enough to be able to investment in capital stock such as plant, equipment, machines, structures, etc. So, they are constrained to rely on the savings of other countries to bridge the domestic saving-investment gap and [...]
The following points highlight the five main causes of low per capita output. The causes are: 1. Low Rates of Saving and Capital Accumulation 2. Shortage of Skilled and Educated Workers 3. Lagging Technological Know-How 4. High Population Growth and Unemployment 5. Political Instability and Government Policies that Discourage Production. Cause # 1. Low Rates of Saving and Capital Accumulation: [...]
In this article we will discuss about the cost-benefit analysis in economics. Capital is not the only scarce resource, even in an LDC. Yet, the exclusive use of the ICOR, a means of selecting, which projects to fund implies that capital alone is scarce. Other resources are scarce as well. Each good has an opportunity cost. In truth, all goods [...]