LEDC’s

Question 1

Main Characteristics of less developed countries?

Answer 1

• Low per capita income

• High levels of poverty and inequality

• Limited infrastructure for transportation, communication, and electricity
networks, for example

• Limited human capital - a less educated/skilled workforce, with lower
levels of literacy and numeracy

• Dependence on primary commodities: rely on exporting primary commodities, such as agricultural products or natural resources, rather than manufactured goods

Question 2

What is Primary Product Dependency?

Answer 2

when a country has a high dependence on extracting & then exporting primary commodities, making it vulnerable to volatile global prices and terms of trade

Question 3

What is an Export-Commodity-Dependent Country?

Answer 3

When more than 60% of
its total merchandise exports are composed of primary commodities.

Question 4

What is Prebisch-Singer Hypothesis? (PSH)

Answer 4

Prebisch-Singer Hypothesis (PSH): over the long run, real prices of
primary commodities such as coffee decline relative to prices of
manufactured goods such as cars because primary products have a lower income elasticity of demand.

Question 5

What is the Resource Curse?

Answer 5

A natural resource/natural gas/oil find attracts inward investment causing the currency to appreciate and making other industries such
as manufacturing less internationally price competitive

Question 6

What is the Savings Gap?

Answer 6

In low-income countries, extreme poverty and weak financial
markets makes it hard to generate enough savings to fund capital investment projects that could boost development