Economics - Sustained development in LDC's

Up until the late twentieth century, economic growth was the key indicator in economic development. If a country was seen to have high growth in real GDP then they were said to be developing. It was believed that the extra money would multiply throughout the economy thus creating development. However, many factors stop the money doing this. High Inflation, low standards of living, poor taxation schemes, high unemployment and an unequal distribution of wealth meant that any gains from growth were not being spread over the economy but rather concentrated on a small percentage of people.

Сycle of rising

The external balance is also a huge problem in LDC'S. The little exports they do have (mostly commodities) are small in comparison to the huge amounts they spend on imports. The need to borrow to finance the CAD's. This leads to the cycle of rising NFD and CAD's. To tackle this problem governments have had to try and promote exports. The WTO worldwide reduction of tariffs will assist this though government policies need to be implemented to seriously boost export revenue and turn the consumers away from imports (import replacement).