Question

There are many reasons why a poor country may fail to catch up with a rich neighbour. Which of the following is NOT one of these reasons?

• A. The poor country may have more rapid population growth
• B. The rich country may have more human capital
• C. The poor country may have a higher saving ratio
• D. The rich country through trade may be more integrated with the world economy

Hint:

Economic factors like human capital, saving ratios, and trade integration significantly affect the growth trajectory of countries.

Answer 1

The Correct Option is C

Step 1: Understand the question.
The question asks for the reason that is NOT why a poor country may fail to catch up with a rich neighbour. We need to evaluate the relationship between factors like population growth, human capital, saving ratio, and trade integration.
Step 2: Evaluate the options.
- (A) The poor country may have more rapid population growth: Rapid population growth in the poor country can hinder its economic development by placing additional strain on resources and infrastructure.
- (B) The rich country may have more human capital: Human capital (education, skills) in the rich country can lead to faster innovation and productivity growth, making it harder for the poor country to catch up.
- (C) The poor country may have a higher saving ratio: This is less likely to be a reason for failure because a higher saving ratio typically supports investment and economic growth. Hence, this is not a reason why the poor country may fail to catch up.
- (D) The rich country through trade may be more integrated with the world economy: Greater trade integration allows the rich country to access new technologies, markets, and capital, giving it an edge over the poor country.
Step 3: Conclusion.
The correct answer is (C) because a higher saving ratio would typically be a factor contributing to economic growth, not a reason for failure. Final Answer: (C) The poor country may have a higher saving ratio