Economics

What Are The Characteristics Of Developing Countries

It is not easy to define clearly an underdeveloped or developing economy. So to find the characteristics of developing countries will not be precise. Different economists have defined an underdeveloped (developing) economy in different ways. The U.N. experts have defined an underdeveloped (developing) country as “one in which per capita income is low when compared with the per capita income of U.S.A, Canada, Australia and Western Europe”. According to Indian Planning Commission, an developing or underdeveloped country is one which is characterized by the un-utilization of manpower on one hand and of natural resources on the other”.

Characteristics of a developing country: A country in which the capital is low in relation to its population and natural resources is called an underdeveloped (developing) country. The characteristics of developing countries are stated in the following:

  1. Low per capita income: Per capita income is very low in developing countries. As per capita income is low, the people are Poor and their standard of living is low in these countries. For example, in India the per capita income is only about 1581 dollars (2015). This is very low when compared with the per capita income of developed countries like Canada.
  2. Importance of Agriculture: In developing countries agriculture is the main occupation. In these countries majority of people depend on agriculture for their living. About 70% of population is employed in agriculture in these countries. Similarly, about 33% of national income comes from agriculture. Although agriculture is the main occupation, the productivity per hectare is very low in these countries. Small holdings, old methods of production and lack of water facilities etc. are responsible for low productivity in agriculture in these countries.
  3. Low industrialization: Developing countries are industrially poor countries. Industrialization is very low in these countries. A very small percentage of people is engaged in industries. Large scale industries are not developed. Most of the industries are consumer goods industries. In these countries only 20% of the people are engaged in industries. Shortage of capital and lack of technology are responsible for poor industrialization in these countries.
  4. Over Population: In these countries the growth rate of population is very high. Due to increase in medical facilities; the death rate has fallen but birth rate remained constant. Therefore, there is a rapid growth in population. It is greater than the growth rate of National income. Therefore it is not possible to increase per capital income unemployment will increase.
  5. Unemployment: Unemployment is another feature of the developing countries. The developing countries are not in a position to absorb the growing population due to shortage of capital. In addition to educated unemployment, there is disguised unemployment in agriculture. Too many people depend on land. This situation is called disguised unemployment. According to a U.N O report in developing countries, disguised unemployment is to the tune of 20 to 25%,
  6. Shortage of capital: The stock of capital is low. The rate of capital growth also is very low in these countries it forms only 5% to 10% of the National income when compared to 25% to 30% of investment in national income of developed countries. This low rate of capital growth is not sufficient even to meet the needs of growing population. Shortage of capital is both a cause and effect of low productivity. The main reason for the shortage of capital is low ravines.
  7. Low level of technology: Developing countries are technologically backward. The methods of production are old and this results in low productivity. These countries lack the capital required to improve science and technology. They cannot also import technology from foreign countries due to the shortage of foreign exchange.
  8. Un-utilization of resources:  The natural resources in developing countries are either under-utilized or unutilized. These countries are not in a position to exploit the natural resources due to the shortage of capital and lack of technology. The natural resources in India have not been fully utilized. For example India has still about 9 crore acres of cultivable waste land. The water power potential of the country is exploited only up to 25%.
  9. Human capital: In developing countries most of the people are uneducated and illiterate. Efficiency of laborers is very low. People are religious and caste minded. Their attitudes do not encourage economic changes. Entrepreneurial ability is also very low. Human resources in these countries are not conducive for economic development.
  10. Foreign trade: Another Characteristics Of Developing Countries is its foreign trade position. In developing countries foreign trade occupies an important place. These countries export their minerals and raw materials and import consumer goods. They get less foreign exchange from their exports and pay more for their finished products. Any drastic change in the demand for their products in the international market will affect the economy of these countries. Any decrease in foreign demand would affect the domestic market. This reduces the income and employment opportunities for the people. As India possess several features o f the developing countries, our country is also cited as an example of developing countries. These are the characteristics of developing countries.

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