R. Nurkse's theory of balanced growth believes that underdeveloped countries are suffering from the vicious circle of poverty, which is determinantal to economic development in these countries. According to him "a circular constellation of forces, tending to act and react upon one another in such a way as to keep a country in a state of poverty." The vicious circle of poverty adversely affects the accumulation of capital in economically underdeveloped countries. If this vicious circle of poverty is broken then development will follow. According to Nurkse "the expansion of the market can be realized only through a process of balanced growth, where people in different countries, working with new and better tools, become each other's consumers. The vicious cycle works on both the demand and supply sides. On the supply side, there is a small capacity to save due to a low level of income, the low level of income results in low productivity whic...
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