Chapter 19, Problem 14AA

To determine

To explain: The three stages of economic development and the stage in which most of the developing countries are found to be.

Explanation of Solution

There are three stages of economic development in which country progress. These stages are as explained below:

1. Agricultural stage: This is the first stage where goods are produced. Workers are engaged in this stage into farming work.

2. Manufacturing stage: This is the second stage where produced goods are manufactured or processed from raw materials to finished goods. People work in factories at this stage.

3. Shifting into the service sector: This is the third stage where people start working in the service sector. This includes sales, food service and technical services.

Most of the developing countries are found to be in the third stage where people are shifting into the service sector. The developing countries try to improve their living, but they face problems of finances in doing so. Hence, they seek investment capital which is provided by developed countries in form of foreign aid.