Why do LEDCs have a trade deficit?

Answer 1

Less Economically Developed Countries (LEDCs) often have a trade deficit because their economies rely heavily on importing manufactured goods and technology, which they cannot produce domestically due to limited industrial capacity. Additionally, many LEDCs primarily export raw materials or agricultural products, which typically have lower value compared to the manufactured goods they import. This imbalance in trade can be exacerbated by factors such as lower productivity, inadequate infrastructure, and reliance on foreign investment. As a result, the value of imports often exceeds that of exports, leading to a trade deficit.