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C. They limit the population's ability to perform skilled labor.
Low literacy rates in a country hinder economic development because individuals with low literacy skills may struggle to find employment or may only be able to obtain low-skilled jobs. This can result in a workforce that lacks the skills necessary for more advanced, higher-paying jobs, ultimately limiting the country's economic growth and competitiveness in the global market. Additionally, a lack of skilled labor can deter foreign investment and technological advancements within the country.