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Development Economics

Characteristics of Underdeveloped or Developing Countries

Characteristics of Underdeveloped countries are divided into common and uncommon characteristics and these are following.

A) Common Characteristics of Underdeveloped Countries:

General Characteristics:

These include a high proportion of the population depending on agriculture, disguised unemployment, low per capita income, zero saving or saving not used for investment in industry and commerce by landowners etc.

Basic Characteristics:

As regards the basic characteristics of agriculture, he mentions low capitalization on land, old agricultural techniques, transport difficulties and absence of sufficient demand for products in local markets, old fashioned methods of production and wide-spread land hunger due to population pressure on land.


Among the demographic characteristics, he has mentioned about high fertility and high mortality rate, low life expectancy at birth, inadequate nutrition, rudimentary hygiene, public health and sanitation and rural overcrowding.

Cultural and Political:

Under cultural and political characteristics, are placed Rudimentary education and high degree of illiteracy, extensive prevalence of child labour, weakness or absence of middle class, low status of women and traditionally determined behaviour of the bulk of the population.

Technological and Miscellaneous:

Technological and miscellaneous characteristics include low yield per acre, lack of facilities for technical training and inadequate transport and communication facilities, especially in rural areas and crude technology.

Deficiency of Capital:

Ragnar Nurkse identified that most striking feature of the poor countries is the deficiency of capital. It is due to their low per capita income, low savings and low investment. In developing countries, the rate of saving and investment is about 10% of G.D.P. whereas it should be more than 20% in these countries. For example, in Pakistan domestic saving was only 8.2% of G.D.P; in 2015-16 whereas it was much higher in India and Bangladesh i.e. 34.6% and 36.5% of their G.D.P.s respectively.

Low Standard of Technology:

The technology employed in the production process in third world countries is extremely out dated due to which cost of production is high and resources are being wasted. The technological backwardness in these countries is due to absence of technical know-how, capital deficiency, labour intensive techniques of production, shortage of foreign exchange, lack of absorption capacity etc.

Lack of Initiative and Drive:

The entrepreneurs in Less Developed Countries (LDCs) lack initiative and drive due to their limited investment, illiteracy, technological backwardness, ignorance of market opportunities etc. In the absence of entrepreneurial dynamism productive resources of these countries are not being fully utilized.

Economic Backwardness:

People in LDCS are economically backward because their social, cultural and psychological setup does not allow them to change their economic condition. The setup has led them to ignorance and illiteracy, immobility and inefficiency of labour, unscientific attitude etc. which are big obstacles in their way to economic development.

Unequal Distribution of Wealth:

There is sharp inequality of income distribution in underdeveloped countries i.e. the rich are extremely rich and poor are extremely poor. For example, in Pakistan more than 80% physical assets are owned by only 2% of the population, whereas 98% masses are hardly making tdieir both ends meet.

Industrial Backwardness:

In less developed countries the industrial sector is small and backward. Most of the people are attached to land and depend on agriculture. Due to low level of capital formation, absence of modern technology and training and education, the industrial sector does not attract much investment. In Pakistan only 23.6% of total labour force is employed in this sector.

Qualitative Aspect of Human Resources:

The developing countries are often labelled for producing lazy and backward people. This is also due to illiteracy, poor training and backward institutional framework.

Market Imperfections:

Market imperfections appear in the form of immobility of four factors of production, price rigidity, ignorance of market conditions, rigid social structure etc. Also in LDCS labour and capital are less mobile in search of higher rewards.


It is a common character of LDCS. The literacy rate of developing countries very low as compared to advanced countries. For example, it has gone up to only 60.0% in 201 in Pakistan whereas it is 73% in India, 85% in Iran and 91% in Sri Lanka; while in advance countries it is almost 100%.

Social Aspects:

Less developed countries have also some factors such as joint la. system, caste system, racial and religious views, belief and values which adversely affect the ent and Measurement of Economic Development

Balance of Payments:

In underdeveloped countries, the balance of payments is always in equilibrium because the value of their imports is greater than their exports, while their exports consist of agricultural products and raw materials. These countries import those products which … high prices and export the products having low prices.

Lack of Experts and Skilled People:

In developed countries skilled persons are in Abundance. Engineers, Technicians, Managers and other experts work efficiently. In less developed countries there is a shortage of experts and skilled labour.

Lack of Infrastructure Facilities:

The communication and transport facilities are inadequate in less developed countries. Hence there are severe constraints on healthy growth and development of different sectors of the economy.

Dependence on External Resources:

LDCS are loans and grants receiving countries. Their foreign trade and economic structure are also dependent on the guidance of foreigners. As their development projects are financed by the loan giving countries, these projects are made to serve the interests of foreign countries. As a result, most of the benefits are shifted to foreign countries after the completion of these projects.

B) Uncommon Characteristics Of Underdeveloped Countries:

Following are the uncommon characteristics of underdeveloped countries or in other words, following are the points of structural difference between Afro-Asian and Latin American underdeveloped countries.

Area, Population and income level:

According to a U.N. report, there are 145 underdeveloped countries in the world, out of which the population in each of 90 countries is less than 15 million and so much so that the population is less than even 5 million in each of the 83 countries. Major underdeveloped countries according to area and population are Brazil, India, Pakistan, Egypt and Nigeria. These countries have large material and human resources and have extensive product markets but still they are primitive societies.

Institutional, Cultural and Social Setup:

Most of the Afro Asian underdeveloped Countries were the colonies of European countries, therefore, European People developed their economic, social and educational institutions according to their own requirements for e.g. administration, military, land tenure system etc. They developed a new culture in these countries which varies extensively from Africa to Asia and it is still existing there.

Political System:

Strong and powerful groups are ruling these countries, unlike European Countries where well-organized political parties are running the government. For example, big landlords and industrialists are ruling the poor Latin American countries. There are sheiks everywhere in the middle-East. In most of the African countries, politicians and government officials are running the government and we find landlords, capitalists and army in power in Asian Countries.

Role of Public and Private Sectors:

There is shortage of skilled manpower in Africa. Therefore, it is being developed in the public sector there. A few underdeveloped Afro-Asian Countries are encouraging their private sector for development due to the failure of their public sector and Pakistan is one of them. Public sector investment is being made under rural development programmes and incentive for investment is given too private sector in the form of tay reduction and credit facilities in these countries.

Structure of the Industrial Sector:

There is a big difference in the industrial structure of these countries. For example, Singapore, Hong Kong, Taiwan and South Africa developed their industrial sector to a larger extent in 1980s. Industrial sector in Latin American countries is much more developed than the industrial sector of Afro-Asian underdeveloped countries. Similarly, strategy of development is different in each of these countries.

Material and Human Resources:

The economic structure of a country is developed on the basis of its material resources i.e. land, raw material, minerals etc. and human resources skilled manpower etc. As resources are different in different underdeveloped countries, therefore their economic problems and solutions are also different from each other.

Dependence on Advanced Countries:

Most of the underdeveloped countries depend on advanced European countries for the import of modern technology which is distorting their value system and educational structure as well. Small underdeveloped countries have got to depend on developed countries as they have meager economic resources for development.

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