The lack of capital formation in developing countries is due in part to
A) excessive foreign aid.
B) the fact that it is harder to forgo current consumption to be able to save.
C) high interest rates.
D) high tax rates on private investment.
E) government prohibitions on private ownership.

Question

Quizplus · Accepted Answer

Developing countries often have lower levels of income and a higher cost of living, meaning it can be harder for individuals and businesses to save money for capital formation. Forgoing current consumption in order to save requires significant sacrifices, such as sacrificing basic needs like food or healthcare. This can limit the availability of capital for investment and growth.

The Lack of Capital Formation in Developing Countries Is Due