Production and Trade Assignment Example | Topics and Well Written Essays - 250 words

Production and Trade - Assignment Example It is therefore apparent that an economy that lacks adequate financial institutions such as in the developing economies suffers from low savings rate, which in turn leads to low investment hence slow economic growth. Financial institutions also help in reducing poverty traps such as reduction of the information cost that may reduce the level of business investment and furthering slowing economic growth. Developing countries experience low economic growth due to lower rate of investment attributed by low savings and high cost of information. Financial institutions are very significant in economic development especially to people who utilize them well. It can be argued that developing economies experience slow economic growth contributed by lack of proper financial institution’s framework and political interference with the financial systems. However, if the rule, regulations and independency of these financial institutions can be addressed, they can greatly speed up economic growth in the developing countries. Financial institutions undergo serious challenges in economically repressed areas since low income earners do not normally save. This therefore inhibits growth of the financial institutions and further minimizes investments hence low economic