Which concept explains that poverty continues because poor countries cannot save or invest sufficiently to build the capital necessary for economic growth?

Economic Problems of Developing Countries MCQs for PPSC, FPSC, NTS, and Pakistan government job tests. Select an option below, then read the explanation.

Economic Problems of Developing Countries

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Subject
Economic Problems of Developing Countrieseconomics-mcqs › economic-problems-of-developing-countries
Published
2 Jun 2019
Last updated
28 May 2026

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Explanation

The vicious circle of poverty hypothesis states that poor nations remain trapped in poverty as their low income prevents them from saving and investing enough to develop the capital stock needed for growth. Other theories like dependency theory, neo-colonialism, and under-consumption focus on different aspects of economic challenges but do not specifically address this self-reinforcing cycle.

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