Some low-income countries generally remain poor because
A) their institutional arrangements and policies often discourage productive activity and reduce the potential gains from specialization and exchange.
B) they are oppressed by developed nations that benefit from the cheap goods available from countries with low wage rates.
C) they are poorly endowed with natural resources, which are essential for long-term growth.
D) when the average income level is low, workers have little incentive to earn higher incomes.

Question

Quizplus · Accepted Answer

Institutional arrangements and policies that discourage productivity and specialization are often a major reason why low-income countries remain poor. When policies make it difficult for businesses to operate or for individuals to succeed, it can discourage investment and economic growth. This can create a cycle of poverty, where there is little opportunity for people to escape their economic circumstances.

Some Low-Income Countries Generally Remain Poor Because