It could happen during the earlier stages of development, or based on Rostow, before the take-off stage. The country has to export mostly monocultural product which has low terms of trade. But it has to import capital goods such as machines and technology which have very high terms of trade. It has to pay high price for foreign staffs and expert services as well. So it is likely possible to have trade deficits. But the economy will grow due to an increase in direct investment both foreign and local. Many countries in Asia which are NICs today, have all of such experience.
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It could happen during the earlier stages of development, or based on Rostow, before the take-off stage. The country has to export mostly monocultural product which has low terms of trade. But it has to import capital goods such as machines and technology which have very high terms of trade. It has to pay high price for foreign staffs and expert services as well. So it is likely possible to have trade deficits. But the economy will grow due to an increase in direct investment both foreign and local. Many countries in Asia which are NICs today, have all of such experience.