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Unformatted text preview: ignores the degree of income distribution, (3) Changes in exchange rates affect gaps between countries, and (4) there is no adjustment for the differences in cost of living between countries. Unlike industrially advanced nations (IACs), less-developed countries (LDCs) have a low GDP per capita and output is produced without large amounts of technologically advanced capital and well-educated labor. The LDCs account for three-fourths of the worlds population. The vicious cycle of poverty is a trap in which the LDC is too poor to save money and therefore it cannot invest enough to significantly increase its production possibilities. As a result the LDC remains poor. Consequently, many LDCs are looking for external sources of funds in the form of foreign private investment, foreign aid, and foreign loans. Many LDCs want greater control over the policies of international financial institutions such as the World Bank and the International Monetary Fund (IMF)....
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- Spring '08