Match each obstacle to economic development in developing nations on the left with its correct economic mechanism or structural manifestation on the right.
- Vicious cycle of povertyLow real income causing low domestic savings, leading to insufficient capital formation and persistent low productivity
- High dependency ratioA large proportion of the population being non-working dependents, diverting national output to immediate consumption rather than investment
- Dualistic economic structureCoexistence of a modern urban sector alongside a traditional subsistence agricultural sector
- Technological backwardnessReliance on outdated production techniques and inadequate research and development, resulting in low output per worker
Answer
The vicious cycle of poverty matches low real income restricting savings and capital formation; high dependency ratio matches a large proportion of non-working dependents diverting output to consumption; dualistic economic structure matches the coexistence of modern and traditional subsistence sectors; technological backwardness matches reliance on outdated techniques resulting in low output per worker.
Each development obstacle is accurately linked to its defining macroeconomic characteristic: the vicious cycle of poverty connects low income to weak capital formation; the high dependency ratio links population structure to heavy consumption demand; economic dualism captures the split between modern and traditional sectors; and technological backwardness explains reduced labor efficiency from outdated methods.
Step-by-Step Solution
Key Concept
Key structural, demographic, and financial obstacles restricting growth and development in developing economies