Ragnar Nurkse’s concept of the ‘Vicious Circle of Poverty’ highlights that poor countries remain poor primarily because:

AForeign trade is illegal

BLow income leads to low savings, low investment, and low capital accumulation, resulting back in low income

CGovernment tax rates are zero

DPopulation growth is zero

Explanation

Nurkse showed how supply-side and demand-side poverty cycles reinforce stagnation in developing economies.

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