If a poor country is going to grow rapidly and achieve a high level of per capita income, which of the following is most important?
A) abundant natural resources
B) substantial aid from rich countries
C) central planning and a high level of government expenditures
D) institutions and policies that encourage productive activities

Question

Quizplus · Accepted Answer

Abundant natural resources and substantial aid from rich countries can certainly help a poor country in the short run, but they are not sufficient for sustained economic growth and development. Central planning and high government expenditures have been tried in many poor countries, but they have often led to inefficiency and corruption rather than growth. In contrast, institutions and policies that encourage productive activities such as investment, innovation, trade, and competition are essential for sustainable growth and development. These policies include secure property rights, efficient legal and regulatory frameworks, macroeconomic stability, education and skills development, and openness to trade and investment.

If a Poor Country Is Going to Grow Rapidly and Achieve