Answer to Question #148211 in Finance for Sedzani

Question

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. Does this argument make sense?

Answer 1

I'd say that partially, it is true that poorly developed financial markets is one reason for poor growth in developing countries. Most of the developing counties are defined by politics. Therefore, the rights to invest in financial securities is limited since money should be kept out of the hands of anyone indirectly linked to the government. Besides, human nature is also a big issue here. This is because human beings are used to resisting any type of change. Therefore, humans' attitude also contributes to slow growth rate in developing countries.