Question

Which of the following is a valid shortcoming of the use of foreign aid to eradicate​ poverty? A. It may not lead to a sizable increase in physical capital in poorer countries. B. It can lead to the polarization of the world economy. C. It mostly leads to the transfer of resources among rich countries. D. It is difficult to transfer aid to poor countries.

Answer 1

The correct answer is letter "A": It may not lead to a sizable increase in physical capital in poorer countries.

Step-by-step explanation:

Most underdeveloped countries rely on foreign aid to reduce the poverty rate. While this is could be the fastest method to relieve social problems it curses the underdeveloped country's economy to remain stagnant. Countries providing aid mostly do it by providing goods of immediate use such as food or clothing but poor countries need investment to improve their industries, generate employment and in such a way increase individuals' income.

Therefore, physical capital is unlikely to grow in poorer countries depending on foreign nations' aid.