Which of the following provides the best explanation of why low-income countries generally remain poor?
A) Their political environment 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 rapid growth.
D) When the average income level is low, workers have little incentive to earn higher incomes.

Question

Quizplus · Accepted Answer

Low-income countries often struggle with political instability, corruption, and policies that discourage productive economic activity. These factors can create a difficult business environment and reduce the potential gains from specialization and exchange. In addition, many low-income countries have weak infrastructure, limited access to credit, and low levels of education and skills among their workforce. These factors can make it difficult for these countries to attract foreign investment and build a strong economy. All of these factors contribute to the tendency for low-income countries to remain poor over the long term.

Which of the Following Provides the Best Explanation of Why