Final answer:
The underdevelopment trap caused by complementary investments is primarily due to coordination failures that prevent required simultaneous investments. To stimulate economic growth, multiple sectors need to be developed in parallel, a process that demands careful planning and coordination.
Step-by-step explanation:
The presence of complementary investments may lead to an underdevelopment trap due to several factors, primarily coordination issues. Specifically, the correct answer to the student's question is D) Coordination failures can prevent the required simultaneous investments. Investments in various sectors such as infrastructure, education, and technology must often occur concurrently to create an environment conducive to economic growth. However, without proper coordination, these investments may not happen simultaneously, which is necessary for their mutual success and for achieving a significant impact on development.
For example, constructing a road network (physical capital) without investing in education (human capital) may not lead to an increase in economic output if the workforce lacks the skills to leverage the new infrastructure. Similarly, attracting foreign investment for a single sector without improving overall business conditions may not sustain long-term growth. The underdevelopment trap is aggravated when countries rely heavily on foreign aid and external investment that is insufficient for comprehensive capital accumulation resulting in positive economic growth. Consequently, strategic planning and implementation are crucial to avoid this trap and ensure that investments complement each other to foster development.