Question:
Define Absorptive capacity.
Define Absorptive capacity.
Updated On: Jun 27, 2025
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Solution and Explanation
Absorptive capacity refers to the ability of an economy to effectively utilize
external aid or investment. It depends on factors such as the availability of skilled manpower,
infrastructure, institutions, and governance mechanisms. A high absorptive capacity ensures
that funds are used efficiently and lead to productive outcomes.
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