Characteristics of developing countries

Developing countries are also called poor countries. Sometimes they are often called underdeveloped economics. According to the UN criteria, countries with less than $400 level of per capita income countries are designated as low income countries and countries with less than $750 per capita income as called less developed economics. These economies are the mid-point between developed and undeveloped economy. It has got the features of both the developed and undeveloped economies. Developing economies refer to India, Pakistan, Brazil, Indonesia and etc. The following are the main characteristics of developing countries:

1-Dualistic Economy All the sectors of economy have not been developed in developing countries. Employment opportunities or activities exist in urban areas whereas traditional production method is used in rural areas. Employment opportunities are less. Hence, these countries have dualistic economy which results in various problems with formulating economic policies. 2-Vicious Circle of Poverty Developing countries are poor. They have low per capita income. Low income means less saving, that is less capital and less investment. Low investment leads to less production that means low income. The vicious circle of poverty is complete. It proves that a poor country is poor because it is poor. It is better understood from the following relation: Low Investment-Low Production-Low Capital-Low Investment-Low Production-Low Income 3-Lack of Basic Infrastructures The factors that help for development are called infrastructures. Good road system, highways, telephone, services, big dams and canals, banks and financial services are some examples of the necessary infrastructures. 4-Lack of Capital and Technology Capital deficiency is another common problem of developing countries. Because the countries are poor, they save less which results in low capital formation. They possess less investment capital. In addition their existing technology is old and unproductive. 5-Lack of Industries and Enterprises The industrial sector in developing countries is at the primary stage of development. Its contribution to GDP is less than 10% employing 2 to 4% of the labor force. Industrial growth is very slow. 6-Underutilized Natural Resources Most of the developing countries are rich in natural resources. However, their exploration and exploitation is limited. Sometimes, foreign companies control them. Generally, raw products are exported at low prices.

7-General Poverty Developing countries are poor. By definition, GDP and Per Capita Income are at low level. General living standard of people in these countries is very low. Poverty is visibly disturbing every aspect of life. General health services for people are insignificant. The life expectancy at birth does not exceed 60 years. 8-Socio-cultural Characteristics Different kinds of social groups reside in a country. They differ in terms of religion, castes, and creeds, cultures and customs, languages and beliefs, etc. Such social and cultural values have deep impact in the economy of a nation. 9- Illiteracy: The important feature of developing economy is its illiteracy. Though efforts are made to eradicate illiteracy but there is still considerable illiteracy and unskilled labor. 10- Agriculture, the main occupation: Most under developed countries are predominantly agricultural. A great maturity of population is engaged in agriculture and allied occupations. This excessive dependence is due to the fact that non-agricultural occupations have not grown at a rate compared with the increase in population. Hence, the growing labor force has to be absorbed in agriculture sector. Major source of income in case of undeveloped and developing economies is agriculture. A large section of population earns living through agriculture. Agriculture is the primary sector of these economies 11- Poor health care The percentage of a countrys budget that is allocated to health services largely determines the standard of health care in that country. If we consider the average percentage of 4% in developing countries as opposed to the 96% in developed countries as shown on the graph on page 12, it is easy to understand why the hospitals in many poor countries are in such a shocking condition. There are simply not enough doctors and facilities for the number of inhabitants of the countries. 12- Low standard of education Education and training determine the standard according to which the population of a country functions and produces goods and services. One must remember that there are approximately 80 million children in the poor South who do not go to school at all, therefore one can understand why poor countries are faced with unemployment. Without the necessary training people cannot be prepared for a vocation. This means that such people have no chance of improving their own conditions. 13-Unemployment Have you seen this somewhere? Over-population and low literacy are some of the main causes of unemployment. Everybody would like to have a job in order to make money to earn a living. People who are unemployed cannot be self-supporting and therefore they are unable to make any contribution to the economy of the country. 14-Overpopulation The population grows much faster in developing countries than in developed countries. Remember that it is not the population alone that will increase at the same time there is a great increase in the need for

food, educational opportunities, housing, energy and job opportunities. Various social, political, economic and ecological problems also increase at the same rate.

15-Control of Govt.: In poor countries, wealthy persons, landlords and elite class not only control the Government but also they have full control over all the major sectors of the economy. This rich class is not interested to solve the problems of the poor for their welfare but make government policies for their own improvement.

16-Inflation: High rate of inflation in poor nations causes economic backwardness. Due to high level of price, purchasing power and saving of the consumers tend to decrease. 17-Market Imperfections: The market imperfections are found in developing countries. It is due to imperfection of markets, the productive efficiency in these countries is low and resources are misallocated.