Question

Some economists argue 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? Why, or why not?

Answer 1

The answer to the following question is given below:

Step-by-step explanation:

There is a significant positive interconnection between financial market creation and growth in the economy.

• Financial markets serve to effectively channel savings and investment flows in the economies in ways that promote the accumulation of capital and products and services output.

• The dominant view in economics seems to be that capital stability leads to growth in numerous ways.

• Therefore, excellently-developed financial markets and organizations will produce growth by growing the contingency fund and risk mitigation and maximizing the efficiency of fund flows from savers to capital projects.

So, we say that the financial market impacts on the economic growth of a country.