Prevalence of Imperfect Markets and Incomplete Information: The success of a
developed market economy depends heavily on the existence of certain institutional,
cultural and legal prerequisites. E.g., strong judiciary, clearly defined property rights,
stable currency, infrastructure of roads and utilities, functional transport and
communication system, free flow of information. While in the industrial societies
most of these are taken for granted, in the developing countries a lot of these legal
and institutional foundations are either absent or extremely weak. The result is
misallocation of resources