A developing country can substantially increase its economic growth if its businesspeople are willing to invest in modern industries that have not yet been pursued there. But being the first to invest in an industry is very risky. Moreover, businesspeople have little incentive to take this risk since if the business succeeds, many other people will invest in the same industry, and the competition will cut into their profits.
The statements above, if true, most strongly support which one of the following claims?
(A) Once a developing country has at least one business in a modern industry, further investment in that industry will not contribute to the country’s economic growth.
(B) In developing countries, there is greater competition within modern industries than within traditional industries.
(C) A developing country can increase its prospects for economic growth by providing added incentive for investment in modern industries that have not yet been pursued there.
(D) A developing country will not experience economic growth unless its businesspeople invest in modern industries.
(E) Investments in a modern industry in a developing country carry little risk as long as the country has at least one other business in that industry.
A. This is unreasonable. We’re told that initial investment boosts the economy, and there’s no evidence suggesting that continued investment wouldn't also help. The conclusion doesn’t follow.
B. Just because investment may not be profitable for entrepreneurs doesn’t mean it can’t benefit the broader economy. Economic growth can occur even if individual investors don’t profit.
C. There’s no support for this claim—the passage says nothing about the level of competition in traditional industries.
D. Correct. This is reasonably supported by the argument. Since there's currently little incentive for entrepreneurs to invest—yet investment likely promotes economic growth—offering incentives could encourage investment and lead to growth.
E. This overreaches. The first sentence says investment in modern industries is one way to grow the economy, not the only way.
