How can the savings gap be plugged, Business Economics

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How can the savings gap be plugged?

Low savings are a barrier type to growth. All developing countries have low incomes therefore low savings. A savings gap can be met through:

• Foreign aid: the UN target is for developed countries to offer 0.7% of Gross Domestic Product as aid.

• Foreign direct investment as like through multinationals

• Surplus through international trade

• Decreased domestic expenditure creates further savings.

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