Friday, April 16, 2010

Characteristics of Developing countries

Characteristics of Developing countries
Developing or underdeveloped countries are those countries in which most of the citizens are compelled to live below poverty line. As a result of this problems in consumption arise in various time periods due to scarcity or shortages of goods and services. In such countries technical and monetary level will be of low quality. In such countries there will be no proper association between production, consumption and distribution. As a result of unemployment propensity to consume will be high resulting in low saving and low investment. In such countries available natural resources will not be utilized property or adequately. In view of these various reasons the per capita income of such countries will also be low.
Developing or underdeveloped economy is that economy in which there are low level of living, absolute poverty, low per capita income, low consumption level, poor health services, high death and birth rates and dependence on foreign countries. Despite having high possibilities of economic development such countries are in the group of underdeveloped countries. Low per capita income unequal distribution of national income, major section of the people dependent upon agriculture, inefficient administration, objectiveless political parties, lack of development in industries, lack of job oriented education, etc. are the characteristics of underdeveloped countries. On the basis of these various facts the characteristics of underdeveloped countries can be explained as follows:
1. Low per capita income
Per capita income in underdeveloped countries will be very low. As a result the living standard of the people of such countries will also be very low. People will have difficulty in consuming even daily necessity goods. People will not even get the minimum daily calories (2124 calories) required. This will have an adverse effect in their health. Countries like Burundi, Congo Dem. Rep., Liberia, Ethiopia etc. are the countries with very low income. The countries with very low per capita income in the world are as follows:
World's Poor countries and their per-capita income

S.No Country Per-capital income (in US dollar)
1. Burundi 110
2. Congo. Dem. Rep. 140
3. Liberia 150
4. Ethiopia 220
5. Eritrea 230
6. Sierra Leone 260
7. Niger 280
Source : World development report 2009
2. Agro-based economy
Underdeveloped countries are mainly dependent on agriculture. Since large number of people of such countries live in rural areas they depend upon agriculture. ThoughCharacteristics of Developing countries dependent on agriculture, only a small part of national income will be contributed by agriculture. The main reason for this is the lack of opportunities for employment and lack of development in industrial sector. About 80% of people of Nepal are directly or indirectly dependent upon agriculture. But about 40% of the national income is contributed by the agricultural sector. But contrary to this in developed countries only minor section of the population will be dependent upon agriculture. Thus, main characteristic of underdeveloped countries is taken to be agro-based economy.
3. Unemployment problem
Unemployment problem is another main characteristic of underdeveloped countries. In such countries due to lack of trained human resources major fraction of the population remains unemployed. Therefore in such countries there will be problems like unemployment, semi-unemployment and seasonal unemployment. The main cause of unemployment is the lack of alternative employment opportunities in other sectors besides agriculture. Semi-unemployment and seasonal unemployment arises in agricultural sector. This is because in underdeveloped countries farmers remain unemployed for rest of the year after working for 3 or 4 months. Likewise in underdeveloped countries agriculture also depends upon season. Therefore if rainfall is on time and sufficient then farmers will have employment for some time only. But if effect of climate is adverse then farmers will be unemployed for even longer time. In underdeveloped countries there will be lack of alternative employment opportunities. Therefore large fraction of population will be unemployed.
4. Traditional techniques of production
In underdeveloped countries technology of production will be based on traditional techniques. Developed countries increase the level of production with the application of new and improved technology. But in underdeveloped countries goods are produced with old technology. As a result productivity of such countries will be very low. The main reason for this is lack of capital, lack of trained human resources, etc. In such countries due to high level of poverty there will be no development in financial institutions. Due to lack of financial institutions the people will not have the habit of saving and also due to high level of poverty their saving capacity will also be very low. Thus as a result of lack of capital investment, in how technology will not be possible. In such countries due to low level of investment the production will also be very low.
5. Unbalanced trade
In underdeveloped countries the balance in trade will always be unbalanced. This is because in such countries import will be more than export. As a result there will be unbalanced trade and balance of payments will also be unbalanced. Lack of capital, lack of facility in transportation and communication, lack of raw materials, lack of markets, etc. are the main causes for the unbalanced trade and imbalance in the balance of payments. Though some raw materials are available in such countries, instead of producing finished goods from those raw materials, the raw materials are exported. As a result income from trade will be low and such countries will be poor.
6. Lack of entrepreneurs
In underdeveloped countries due to various reasons there will be lack of entrepreneurs. Lack of capital, lack of technical knowledge, very limited markets etc. are the main reasons for the lack of entrepreneurs in underdeveloped countries. Due to these various reasons the businessmen are not interested in investing in such countries. In such countries due to excessive poverty also there will very few investors or entrepreneurs. In such countries there will also be lack of policies which motivate investment. In such countries there will be few industrialists only and they will exploit consumers by creating monopoly over various goods and services. This is because the main objective of such entrepreneurs is profit earning rather the economic development of the country.
7. Dualistic economy
In developing countries there will be a mixture of two types of economic system. One will be based on traditional system and the other one will be based on modern system. In such countries traditional economic system will be present in the rural sectors and the modern economic system will be practised in a few limited urban sectors. Thus, in rural areas there will be lack of infrastructures such as roads and transportation, schools and colleges, communication facilities, etc. In such sectors agricultural industries based on traditional system will be present. This will not make the economic system efficient and strong. On the other hand in urban areas there will be facilities of roads and transportation, modern schools and colleges, communication and modern facilities. In urban areas some modern industries and factories will also be established. So, due to dualistic economy the society will be divided into two different classes this will slow down the economic growth even more because rich people of rural areas will migrate towards urban areas having various modern facilities. As a result urban living will also be difficult.
8. High population growth rate
As compared to developed countries the population growth rate is very high in underdeveloped countries. The higher population growth is one of the main reasons for Nepal in being an underdeveloped country. According to the latest census of Nepal 2001 AD the population growth rate is 2.24 percent but population growth rate of developed countries is less than 1 percent.
9. Low utilization of natural resources
In underdeveloped countries natural resources are used partially or in very small quantity. In such countries the true facts about the availability of natural resources will not be known. The utilization of the available natural resources will also be very low. In such countries the various natural resources such as forest resources, water resources, minerals, etc. will be available in large quantity. But these natural resources will not be utilized properly for the long-run economic development. Despite the availability of natural resources in large quantity such countries will not be able to exploit those resources for the benefit of the country. For example, Nepal has the capacity of producing 83,000 mega watts of hydro-electricity, but the production of hydro-electricity is very low. Not even one percent has been produced.
10. Political instability
In underdeveloped countries there is always political instability. No elected government will be able to work for the full term. This is because in such countries major fraction of the population will be illiterate. Such people will have lack of political awareness. Leaders and party workers are motivated in getting different posts by various ways and use such posts as earning place. Due to lack of administrative ability administrative work will be unsystematic. Salary required for the fulfillment of the basic requirements will not be given to the office staff. As a result they will be engaged in earning through illegal means. As a result corruption will increase and political instability will be created.
11. Gender discrimination
In underdeveloped countries gender discrimination will be in intensive form. In such countries role of women will be negligible. There will be majority of males in every sector of employment. As a result women will be limited to only household works. Women don't have right in acquiring parental wealth and property. Literacy of females is also very low as compared to that of males. In rural areas females are even deprived from getting enough food. Thus in underdeveloped countries there will be a great discrimination between males and females.
12. Lack of development of infrastructure
In underdeveloped countries there will be lack of development of infrastructure. In such countries facilities of transportation and communication will not be expanded adequately. One a small fraction of the population of such countries will have access to hydro-electricity power. Expansion of banking and financial institutions will be inadequate. For this reason the farmers of the rural areas will have to depend upon high interest rates of landlords and money lenders. The farmers are even exploited by the people of such class. People have to travel on foot for weeks to go from one place to another. So, lack of development of infrastructures is also the major problem of the underdeveloped countries.


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