Consider Two Hypothetical Developing Countries,both with Very Low Incomes at Similar

question 125

Essay

Consider two hypothetical developing countries,both with very low incomes at similar levels.Country A has a very even distribution of income.Nearly everyone in country A has a similar income.Country B has great variation in income.A small percentage of persons in country B would be classified as middle class,and a smaller number as wealthy,by the standards of developed nations.All other things equal,which of these countries has more potential for development?

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Definitions:

Comparative Advantage

The capacity of a person, business, or nation to create a product or offer a service at a reduced opportunity cost compared to their rivals, thereby gaining specialized production and advantages in trade.

Production Possibilities

The different quantities of goods that an economy can produce with a certain set of resources and technology.

Natural-Resource Abundant

Refers to countries or regions possessing significant amounts of valuable natural resources, such as minerals, oil, or fertile land, which can contribute to their economic growth and development.

Land-Intensive

Describes production processes or industries that require a large amount of land to produce goods or services, compared to labor or capital.