Also, in the South there is great disparity in wealth among and within countries. A few NICs have expanding and modernizing economies. There is also, in most LDCs, a small wealthy class of people and a much larger class of impoverished people. The LDCs need hard currency capital to buy the goods and services that will allow them to develop their economies. There are, however, problems with each of these sources.
Loans are unsatisfactory because of high repayment costs.
The debt crisis has eased, but LDC debt is growing once again and could threaten the global financial community. Investment capital has grown in amount and importance in recent years. Still, investment capital flows mostly into just a few LDCs. The catch-22 of trade is that the primary products that LDCs mainly produce do not earn them enough capital to found industries to produce manufactured goods that would earn more money. Foreign aid is minor compared with world needs and is often given on the basis of political expediency rather than economic necessity.