Poor countries are trapped in a vicious circle of poverty. For output to grow, they must accumulate

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Poor countries are trapped in a vicious circle of poverty. For output to grow, they must accumulate capital. To accumulate capital, they must save (consume less than they produce). Because they are poor, they have little or no extra output available for savings—it must all go to feed and clothe the present generation. Thus they are doomed to stay poor forever. Comment on each step in that argument.

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Principles of Macroeconomics

ISBN: 978-0134078809

12th edition

Authors: Karl E. Case, Ray C. Fair, Sharon E. Oster

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