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Why interest rate in developing is higher than developed countries?
Wiki User
∙ 10y ago
There are several reasons for this but probably the main one is that developing countries are starting from a lower base income level than their developed country counterparts. Then there is also the presence of transfers (ODA etc) from developed to developing countries; higher population growth rates in developing countries; and the general shift of labour from agriculture to faster growing service and industrial industries that's taking place in developing countries. FDI is also growing faster into developing countries than into developed economies. General trade liberalisation is also helping developing countries even though there remain many barriers still in place.
David Michael
www.wondu.com
Wiki User
∙ 15y ago
Wiki User
∙ 10y agoIt can be understood through the dynamics of supply and demand.
If the supply of a product is more than the demand of that product, the price of that product will be higher and vice versa. For example, the labor pricein densely populated countries such as Bangladesh and China are low since there are more labor than the economy can consume. On the other hand, in the labor-scare countries such as the those in Western Europe and Japan have manyfold higher labor price.
Similarly, a country where the supply of capital is lower than the demand, as is the case for almost all the developing and underdeveloped countries, the rate of interest will be higher. The vice-versa situation is also applicable in this case.
Now you may ask, why the supply of capital in a country is lower? This is because either the income of the people in that country is not sufficient to fill in the savings that will match the demand of the capital or the tendency (propensity) of saving is less no matter what the income of the population in that country is.
(Courtesy: Schawjibb)
Wiki User
∙ 11y agoDeveloped countries have a higher standard of living, less corruption, more strict (but fair) laws, etc. All this will play a role in developed countries having a higher national income than underdeveloped ones.
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What do you notice about the population growth rate of the developing countries?
The population growth rate of developing countries tends to be higher than that of developed countries. Factors such as high fertility rates, improved healthcare leading to lower mortality rates, and limited access to family planning services contribute to this faster growth in developing nations. This can put pressure on resources and infrastructure in these countries.
What is a sentence for standard of living?
People in developed countries have a higher standard of living then people in developing countries.
What is the difference between developed and developing?
Developed is past tense which means that it has already occurred, whereas developing is present (continuous) tense and refers something happening currently.With regard to world economies, the distinction is that developed countries have a higher level of production and per capita income than countries defined as developing (less developed).
What is a main difference between developed countries and developing countries?
The income level and standard of living
Why are population growth rates in south Korea and Taiwan different from those in cambodia?
Cambodia is a developing country while South Korea and Taiwan are developed countries. Developing countries usually have higher reproductive rates because in developing countries, people marry earlier and have more children to help with bringing money into the home.
Does India provide a higher agricultural subsidy than the developed countries?
Yes it did provide a higher agricultural subsidy than the developed countries.
Is GNP generally higher in industrial or developing countries?
Industrial
Why is consumption of resources higher in developed nation than developing nation?
yes when mating
Why consumption of resources is higher in developed nation than developing nation?
yes when mating
Why consumption of resources is higher in developed nation than in developing nation?
yes when mating
How does the literacy of men and women nearly equal in developed countries differ in less developed countries?
Men have a higher rate.
How has the US trade of 2002 affected developing economies?
The U.S. trade of 2002 affected developing countries by providing better opportunities and higher living standards in those countries.
