- Fall in volume of exports – rely on primary/agricultural products usually affected by drought yielding low production hence low exports hence reduced foreign earning
- Deteriorating terms trade – value of exports are low relative to the value of imports hence pay more than the foreign earned
- Less capital inflow compared to outflow- they usually borrow money from developed countries at repay at high interest rates creating a net capital out flow.
- Devaluation policy – devaluation of local currency makes exports cheaper to foreigners and hence an increase in the cost importation
- Increase in import volume of capital goods and industrial raw materials for development purposes. This increases expenditure on foreign good.
Partson254 answered the question on June 14, 2018 at 03:39
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