ABSTRACT
Developing countries are commonly considered to be caught in a poverty trap from which they cannot escape (sections 7.1 and 7.2). A closer look can lead to a more differentiated view. For example, we have to distinguish between underdeveloped countries, newly industrializing countries and newly industrialized countries (section 7.3). Import substitution and export diversification are discussed as the main development strategies (section 7.4). An important condition for a successful development is an institutional infrastructure (section 7.5). Its lack is one of the reasons for the debt crisis of the 1980s (section 7.6). Macroeconomic instability is a severe economic problem of most developing countries (section 7.7). Finally, the approaches of expenditure reduction and expenditure switching are discussed (section 7.8).
