Why is economic growth so slow or non-existent in many third ...

[wenmo]

Why is economic growth so slow or non-existent in many third world countries? What policies would you propose to improve the situation?
 
  What will be an ideal response?

Question 2

If the Fed sells government securities to a member of the nonbank public, then the resulting effect on the quantity of money is
 
  A) that there is no change in the quantity of money.
  B) much larger than if the securities were sold to a bank.
  C) much smaller than if the securities were sold to a bank.
  D) the same as if the securities were sold to a bank.
  E) None of the above answers is correct.

[aprice35067]

Answer to Question 1

Slow-growing third world countries generally lack the necessary preconditions for economic growth: economic freedom, secure property rights, and freely functioning markets. In many of these nations, a corrupt legal system and government means that the rule of law and property rights are absent. In order to increase economic growth in these nations, policies that create economic freedom, secure property rights, and free markets must be adopted. It does not matter if these policies are adopted by a democratic government or by an authoritarian government, the key point is that they are necessary for the nation to grow. Thus, specific policies include creating an efficient legal system that respects the rule of law and enforces property rights and contracts; eliminating government corruption that undermines the rule of law; and, in order to establish free markets, decreasing government bureaucracy and limits to trade, such as high taxes, regulations, and import bans.

Answer to Question 2

D