Case Interview Prep

Answer: D - Developing countries can be trapped in low levels of GDP because their institutions do not take full advantage of innovation from more advanced countries.

Key Takeaway: Ideas and innovation have become a capital of intellectual nature for developed countries. While many of these ideas and innovations are patented by the originating countries, there are spillovers whereby a patent expires or the intellectual development is open for use by others. Developing countries that do not take full advantage of these spillovers are often threatened by low levels of GDP.