Less-Developed Countries (LDCs) are caught in a vicious circle of poverty. For output to increase, they must build up capital. To build up capital, they must save and consume less than what they are producing. However, because they are poor, they have little or no extra output available for savings as it must go toward feeding and clothing the current generation. Thus, they are destined to remain poor forever.
How should developed-countries and international institutions assist LDCs to develop and are there unintended consequences?