Developing Countries Essay

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Developing countries are closely linked to debt. This is because developing countries needs to allocate more funds to resolve debt crises. Debt can create a negative effect to the host country’s economy and the social condition of a country. This issue of indebtedness is usually solved using domestic capital. Since developing countries have low income, therefore they have low level of savings. The savings are insufficient to repay debt. Thus the government resolves the issue by imposing higher tax. But this will lead to inflationary tax, which is a burden to the further generation. Therefore, the government resorts to foreign borrowings. Domestic borrowings and foreign borrowings have further increased the total debt accumulated by the…show more content…
Thus, the higher the degree of receptiveness enhances the nation capacity to attract foreign direct investment. The level of education attained can be represented by the human capital development of the nation meanwhile the economic integration is through the financial development and environmental condition of the nation. Education builds human capital and prepares them for the rapidly changing global economy. Education fitness improves the ability to process information, creation through research & development that prepares a fertile ground. Hence, human capital can create a location advantage. Human capital also includes education and training. Training develops people by transferring information and knowledge to employees, equipping employees to translate information and knowledge into practice with a view to enhance organization effectiveness, productivity and the quality of managing people. This will direct the inflow of foreign direct investment to robust the economy. Market in a nation is also the economic and financial indicator in attracting foreign direct investment. Financial development has a strong positive effect on economic growth because well-developed financial systems could channel financial resources to the most productive use. Thus it will reduce the transaction and information costs in an economy. Market fitness should be exposed to competition with protective regulation. This is essential because it involves
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