What is the problem with saving in DVCs, even when saving as a percentage of domestic output is the same as in industrially advanced countries?
A) The interest rate paid on money kept in a bank in DVCs is not as high as the interest rate on money kept in a bank in an IAC.
B) Capital ﬂight reduces investment opportunities and the need for saving in DVCs.
C) There is a continual brain drain that removes skilled labor from the work force and reduces labor productivity and the need for saving.
D) The domestic output of DVCs is so low that the absolute volume of saving is small.

Question

Quizplus · Accepted Answer

The issue with saving in Developing and Vulnerable Countries (DVCs) is that even if the saving rate as a percentage of domestic output matches that of industrially advanced countries, the absolute volume of savings remains small due to the lower level of domestic output in DVCs. This makes it challenging to accumulate significant capital for investment.

What Is the Problem with Saving in DVCs, Even When