why do developing countries face a balance of payments deficit? (need full explanation preferably point form.)

Answer 1

Keep in mind what 'balance of payments' means.

A balance of payments deficit (importing more then exporting) must be offset by a capital account surplus (investment money flowing into the country). Simply put, the two must balance or else the exchange rate will move till it does.

I suggest that the capital account side is what drives things. A developing economy offers attractive opportunities for investing capital, so a lot of money flows from the developed world into the developing country in the form of investment. These investments improve productivity in the developing country and increase demand for labour there.

Imagine the converse for a moment. For a developing country to run a balance of payments surplus, it would have to have a capital account deficit - i.e. the developing country would have to be a net _investor_ in other countries. Seems unlikely, doesn't it?

Answer 2

Having a balance of payments deficit means that a country imports more than it exports. So put simply, developing countries rely on imported goods and in addition, but are not able to export as many goods.

Answer 3

!. They produce mainly primary products
2. They are paid little for these goods
3.They are exploited by multinational corporations
4.Most times when aid is given by developed countries it must be spent on commodities from the developed country.
5. They purchase all manufactured goods from the developed countries.
6. When manufacturing is done in developed countries it is often done in sweat shops and with such tax breaks that very little goes to poor country.
7. The price of most primary products (except oil ) is controlled by the developed country
8. All were colonies and their economies were set up to satisfy the colonial master.

Answer 4

unlawful extraterrestrial beings and unlawful immigration has lots to do with the deficit in California. unlawful extraterrestrial beings have been draining the state's financial device for some years. Over a number of years California close down eighty 5 Hospitals because of the fact the fee of giving unfastened wellness care to unlawful extraterrestrial beings and their anchor toddler infants grew to become into costing the states tax payers hundred of hundreds of thousands of greenbacks. additionally unlawful extraterrestrial beings generally stay alongside with extra beneficial than one kinfolk in one kinfolk domicile and the the regular public college device is figuring out to purchase an preparation for his or her infants and the state is barely receiving property taxes for one single kinfolk domicile while there are 2 or extra households residing in one domicile and the state isn't receiving sufficient property revenuefor the quantity of babies being knowledgeable then the load of the loss in revenueis being located on voters tax payers to make up for the loss.