What are the reasons for the low growth rate in the economy?

Slower economic growth due to weak aggregate demand The other main cause of low economic growth is weak aggregate demand. If demand-side factors are weak, then the economy is more likely to experience a negative output gap – real GDP is less than potential GDP.

Do more developed countries have higher growth rates?

GDP growth rates in developing countries are on average higher than those in developed countries. Over the 1965-99 period, the average annual growth rate was 4.1 percent in low-income countries, 4.2 percent in middle-income countries, and 3.2 percent in high-income countries (see Figure 4.1).

Why are developing countries different from developed countries?

A country having an effective rate of industrialization and individual income is known as Developed Country. Developing Country is a country which has a slow rate of industrialization and low per capita income. Infant mortality rate, death rate and birth rate is low while the life expectancy rate is high.

Why did some countries develop faster than others?

Throughout history, some economies have expanded faster than others. Some differences can be traced to such inherent factors as climate and geography. Policies affecting access to technology, sound money and banking practices, and prudent taxing and spending can improve or stifle economic growth.

Why do economies in developing countries grow slowly?

Some economists suspect that one of the reasons that economies in developing countries grow so slowly is that they do not have well-developed financial markets. It’s very difficult and expensive to do in undeveloped markets. Microfinance tries to develop financial markets to aid in transactions.

Why do economic growth rates matter?

Economic growth provides financial stability. Economic growth gives workers more power, because employers know that workers can get another job easily. All these things increase financial security and family stability. That is why raising the rate of economic growth is so important.

Why is growth rate higher in developing countries?

Several factors are responsible for the rapid growth: a drop in mortality rates, a young population, improved standards of living, and attitudes and practices which favor high fertility.