As a result of the difference in technologies used, the labour productivity and levels of earnings in the modern sector are much higher than those in the traditional sector. TOS4. There is a growing and legitimate desire of the poor nations to eradicate poverty. Low levels of living Besides, lack of education and skills makes people less adaptable to change and lowers the ability to organise and manage industrial enterprises. Some developing countries have weak institutional structure such as lack of property rights, absence of the rule of law and political instability which affect incentives to invest. What do we find today? To quote Amartya Sen, “The valued functioning may vary from elementary ones, such as being adequately nourished and being free from avoidable diseases to very complex activities or personal states such as being able to take part in the life of community and having self-respect”. Low Per Capita Real Income. The desire to develop is keenly felt by different sections of their population. Since then there has been substantial increase in the rate of saving and investment in the developing countries. Characteristics of Developing Countries BY Hafeez260 The theme of this essay is: the importance of a study of other semi-developed countries as they struggle for economic growth, the elimination of mass poverty and, at the political level, for democratisation and the reduction of reliance on coercion. Low Standards of Living, characterized by low incomes, inequality, poor health and inadequate education 2. With this agricultural holdings have become sub-divided into small plots which do not permit the use of efficient methods of cultivation. The low level of capital formation in a developing country is due both to the weakness of the inducement to invest and to the low propensity and capacity to save. about 260 million people) lives below the poverty line, that is, they are unable to get even sufficient calories of food needed for minimum subsistence, not to speak of minimum clothing and housing facilities. Developing countries tend to have some characteristics in common. Political independence has naturally raised expectations of the people in the economic sphere. Unemployment and Poverty: Low: High: Rates The Main characteristics of a developed country Are those that account for the social, economic, political and environmental advances made. Unexploited Natural Resources and Others. The natural resources in an underdeveloped economy are either unutilised or underutilised. With the explosive rate of growth of population and labour force and the limited creation of employment opportunities in the modern sectors because of the highly capital-intensive technology, surplus labour has emerged in the agriculture and services. Generally speaking, under-developed countries are not deficient in land, water, mineral, forest or power resources, though they may be untapped. This realization has been further strengthened by the ever-increasing contacts and communications between such countries and the developed countries. The low levels of per capita income and poverty in developing countries is due to low levels of productivity in various fields of production. They have now realized that the solution of the problem of poverty lies in economic development. Before publishing your Articles on this site, please read the following pages: 1. The developing countries are not only furnished with low levels of living, but they are characterized by low levels of labor productivity. In India the percentage of undernourished persons to total population was high at 21 per cent but Brazil has succeeded in lowering it to 6 per cent of the population. If these surpluses are channelled into productive investment, they would tend to increase substantially the level of capital formation. Further, about 30 to 50 per cent of national income of these countries is obtained from agriculture alone. Note that, according to the new view as made popular by Amartya Sen economic development is needed mainly for two reasons: (2) Enlargement of human capabilities and freedoms. It will be seen from Table 4.2 that in 2009, population of the world was estimated at 6,775 million in 2009 and its annual population growth in 1990-2009 was 1.3 per cent. Low standard of living. However, the quantity of capital per head is still very low in them and therefore productivity remains low. This is due to use of capital-intensive technologies in the organised industrial and services sectors. The United States is considered a highly developed country, which is a general category for countries that are highly industrialized and have … With the growth of population in the last few decades the demographic preserve on land has increased resulting in fall in land-labour ratio. When increasing population cannot obtain employment in the modern non-agricultural occupations, such as industry, transport and other services, then the people remain on land and agriculture and do some work which they are able to get. It will be seen from Table 4.3 that in India enrolment for secondary education is 60 per cent and in China 78 per cent of relevant age group. According to the concept of technological dualism, the important difference between the traditional and the modern sectors lies in the difference between the production techniques or technologies used. Share Your PPT File, Effects of Tariffs on Terms of Trade | International Economics. Besides, health enjoyed by the people is good in itself as it directly increases the happiness and welfare of the people, Lower health of the people of developing countries is manifested lower life expectancy at birth, higher mortality rate of children under 5 years age, undernourishment and malnourishment (i.e., underweight children) of the people and access to improved sanitation facilities. The South- East and Eastern Asia, on the other hand, have large populations. However, there appears to be a common feature, namely, a rapid rate of population growth. The first important feature of the developing countries is their low per capita income. However, developing countries have the potential for high growth and security when evaluating factors, including the standard of living, gross domestic product, and per capita income. Technology can be used to assist countries in developing their economies, building trade opportunities and furthering education. COMMON CHARACTERISTICS OF DEVELOPING COUNTRIES 1. Low per Capita Income: An underdeveloped country is a poor country. The following are the basic characteristics of a developed country. While most of them are located in many parts of Africa and Asia, some countries in South and Central America are also referred to as developing countries. Developing countries are the poor countries of our world. The diversity among developing economies is perhaps nowhere to be seen so much in evidence as in respect of the facts of their population in respect of its size, density and growth. In the early 1950s in most of developing countries investment was only 5 per cent to 8 per cent of the national income, whereas in the United States, Canada, and Western Europe, it was generally from 15 per cent to 30 per cent. 1. As against these, for the year 1995 per capita income was $ 26,980 in USA, $ 23,750 in Sweden, $ 39,640 in Japan and 40,630 in Switzerland. Emerging markets, also known as emerging economies or developing countries, are nations that are investing in more productive capacity. Disclaimer Copyright, Share Your Knowledge Our mission is to provide an online platform to help students to discuss anything and everything about Economics. Keeping in view this dualistic structure of less developed economies, important models of income and employment have been propounded. It will be seen from this table that as compared to high income countries enrolment in secondary and tertiary educational institutions was 38% and 63% of person of relevant age group in 2009 as compared to 100 per cent in high-income developed countries. The low levels of productivity in the developing economies has been caused by dominance of low-productivity agriculture and informal sectors in their economies, low levels of capital formation – both physical and human (education, health), lack of technological progress, rapid population growth which are in fact the very characteristics of the underdeveloped nature of the developing economies. Once specific problem developing countries face is a general lack of wealth, which negatively affects quality of life in a variety of ways, particularly in access to education. It is usually caused through media like films, television or through foreign visits. In the present-day developed countries, the modern industrial growth brought about structural transformation with the proportion of working population engaged in agriculture falling drastically and that employed in the modern industrial and services sectors rising enormously. It is because of common characteristics that their developmental problems are studied within a common analytical framework of development economics. For these reasons, reformers in developing countries feel a sense of urgency not felt by their counterparts in rich countries. Some of the indicators used to define a state as either developed or developing include the World Bank Income Classification, Human Development Index, and fall in Extreme Poverty among others. In many others, the developing countries do not share common interests and may find themselves on opposite sides of a negotiation. The data of various health indicators is given in Table 4.4. Developing countries are countries with economies that have a low gross domestic product (GDP) per capita and rely heavily on agriculture as the primary industry. The commonalities between developed countries include an improved quality of life and greater access to basic necessities. When it comes to regions of the world, developing countries have not quite reached economic maturity, although there's a wide array of different definitions. Thus, according to Amartya Sen, freedom of choice, and control of one’s own life are central aspects of well-being for which true development is needed. Todaro classifies these common characteristics into six broad categories: Indian economy possesses all the characteristics common to underdeveloped or developing countries. Yet, as Table 2 shows, some of the poorest It may however be noted that after the Second World War and with getting political freedom from colonial rule, in a good number of the underdeveloped countries the process of growth has been started and their gross domestic product (GDP) and per capita income are increasing. The differences can be found in subjects of immense importance to developing countries, such as agriculture. To achieve these economic growths is necessary but not sufficient. Agricultural Backwardness 6. The term "developing" describes a currently observed situation and not a changing dynamic or expected progress direction. Further, in countries like India, advantage of demographic dividend can be taken only if the younger persons can be educated, healthy and equipped with appropriate skills so that they can be employed in productive activities. Another common characteristic of developing countries is that they either have high... 3. - Technology includes 24/7 access to communication systems and the internet. Since the late 1990s, developing countries tended to demonstrate higher growth rates than developed countries.   They are moving away from their traditional economies that have relied on agriculture and the export of raw materials. Under – developed countries are characterized by low output, capital and investment, excessive population growth, agricultural dependence and un-utilisation or underutilization of natural resources. A large bulk of population of these countries lives below the poverty line. Characteristics of Developed Countries. But most often the sector in which the greatest concentration of incomes lies is the one which derives its income primarily from non-entrepreneurial sources such as unearned incomes of rents, interests and monopoly profits. The data of various education indicators is given in Table 4.3. Developing Country is a country which has a slow rate of industrialization and low per capita income. Mass Poverty 3. Ever-increasing discontent in the poor countries is bound, sooner or later, to aggravate the already explosive situation in the world. An important feature of developing economies, especially those which are marked by surplus labour is that they have a dualistic structure. This excessive dependence on agriculture is the result of low productivity and backwardness of their agriculture and lack of modern industrial growth. However, despite this great diversity there are many common features of the developing economies. In India adult literacy rate is only 63 per cent in 2009 whereas it is much higher in China (94 %) and Brazil (90 %) as compared to 98% in high-income developed countries. characteristics of poverty include inadequate diet, poor health, short life expectancy, and illiteracy. Besides, there are lot of differences with regard to levels of education, health, food production and availability of natural resources. Low per capita real income is one of the most defining characteristics of developing... 2. The rate of saving in developing countries is low primarily because of the low level of national income. What is more important is that economic development of the poor countries is necessary from the point of view of the richer countries. Second, Child nutrition which is here measured by malnourishment of children under 5 year’s age who are underweight. The developing countries lack in human capital that is responsible for low productivity of labour and capital in them. A developing country is generally predominantly agricultural. Common Characteristics of LDCs: According to United Nations’ data, there are 130 (74) developing countries in the world. In the small modern sector consisting of large-scale manufacturing and mining which provides wage employment, highly capital-intensive techniques imported from the developed countries are used. Has a high income per capita. As a result, marginal productivity of a wide range of labourers employed in agriculture is zero. This should have resulted in a greater volume of savings available for capital formation. Other common characteristics include widespread poverty, low education and literacy levels, and government corruption. Characteristics. Some of the major population problems of the developing countries have been briefly examined in the following paras: 1. First, undernourished persons in a country as per cent of population, undernourishment refers to dietary energy consumption that is continuously below minimum requirement for maintaining healthy life so as to carry out light physical activity with an acceptable minimum weight. Heavy Population Pressure 5. This website includes study notes, research papers, essays, articles and other allied information submitted by visitors like YOU. Many of these nations have an economy that is based on farming. The population growths in low-income developing countries have been 2.3 per cent per annum during 1990-2009 and of middle income developing countries as a whole has been 1.3 per cent per annum. Both children and boys below the age of 15 years (i.e., young ones) and the old people above the age of 65 years and above represent dependency burden as they are unproductive members and are financially dependent on the working population. The United Nations has classified different countries around the world as either developed countries or developing countries. The situation in other developing countries is no better. It is … Lack of education manifests itself in lower enrolment rate in primary, secondary and tertiary educational institutions which impact knowledge and skills of the people. Wider income inequalities. The same is the case with regard to access to improved sanitation facilities. Imagine a big city in the United States and a small village in Ethiopia. Importance of Agriculture: In developing countries agriculture is the main occupation. It has been possible for agriculture to contain the surplus labour because of the prevalence of extended family system in which both work and income are shared by the family members. A number of different coalitions among different groups of developing countries have emerged for this reason. The main problem in their case is that such resources have not been fully and properly utilised due to various difficulties such as shortage of capital, primitive technology and the small size of the market. Large inequalities in income distribution prevailing in these economies have made the lives of the people more miserable. Some developing countries are largely dependent on exports of primary products, others do not show such dependence, and others do not show such dependence. The World Bank describes the terms ‘developing world’ and ‘developing country’ as ‘tricky.’ The World Bank is a UN institution that offers loans to developing countries for capital projects.Using the terms is tricky even when people use them cautiously and are not judging the country’s development status.When listing or categorizing countries for statistics and reports, the World Bank does not use the term ‘developing country.’Accord… The term refers to the current state of a nation and is not used to determine changing dynamics or future progress. High Population Growth Rate. Two types of statistical data regarding nutrition are given in Table 4.4. Besides, there are lot of differences with regard to levels of education, health, food production and availability of … The masses in the poor countries constantly face hunger, illiteracy, sickness and are forced to eke out a life of extreme poverty. Developed countries are countries that already have high technology and an evenly distributed economic level. No wonder that people of these countries which have won freedom from the colonial rule aspire to develop economically and that in the shortest possible time. It may however be noted that the extent of poverty prevailing in the developing countries is not fully reflected in the per capita income which is only an average income and also includes the incomes of the rich also. As regards the prevalence of malnourishment, the condition in India is shocking as it has the highest, 43.5%, of children less than 5 years age whereas it is only 1.3% in 2009. Share Your Word File This occurred due to the rapid growth of the modern sector on the one hand and tremendous rise in productivity in agriculture on the other. Times are gone when people believed in their destiny or kismet. However, it is technological dualism rather than Boeke’s social dualism which has an important bearing on the problem of economic growth and surplus labour in the developing countries. While developing countries are countries where the level of welfare of the population is still in the middle of developing level. - Developing countries often lack access to technology, which impacts on the ability of citizens to gain an education and income. The unemployment and underemployment in these less developed economies are not only due to the slow growth of capital or low rate of investment, it is also due to the highly capital-intensive techniques used in the modern sector. The level of per capita income being quite low, most of it is spent on satisfying the bare necessities of life, leaving a very little margin of income for capital accumulation. This includes health risks such as having low access to safe water and sanitation and hygiene problems. A developing country is also known as an LMIC, or a low and middle-income country. Such a situation threatens the economic and political stability of the world. Unemployment Problem 7. Developed countries share several other characteristics: They are highly industrialized. Some countries such as countries of Africa do not face problem of rapid population growth, others have to cope with the consequences of rapid population growth. About 60 to 75 per cent of its population depends on agriculture and its allied activities for its livelihood. Likewise, health, the other important human resource, is a key factor that determines efficiency or productivity of the people. For the removal of poverty capabilities of the poor should be enhanced so that they should be able to meet their minimum basic needs which include getting adequate food, health, clothing and shelter. The low level of investment also arises as a result of the lack of dynamic entrepreneurship which was regarded by Schumpeter as the focal point in the process of economic development. This rate has been rising still more in recent years, thanks to the advances in medical sciences which have greatly reduced the death rate due to epidemics and diseases. At the root of capital deficiency is the shortage of savings. These countries are characterized by being less developed industrially and a lower Human Development Index than other countries. The United Nations has set a list of Sustainable Development Goals designed to help developing countries overcome these challenges. Privacy Policy3. There is a very urgent need for economic development in the underdeveloped or poor countries. High incidence rate of poverty. This technological dualism with the fact that modern sector has limited labour-absorptive capacity contains important implications for development strategy to be framed for less developed countries like India with surplus labour. Gross National Income Per Capita Even with an increase in the level of individual incomes in a developing economy, there does not usually follow a higher rate of accumulation because of the tendency to copy the higher levels of consumption prevailing in the advanced countries. Some developing countries have weak institutional structure such as lack of property rights, absence of the rule of law and political instability which affect incentives to invest. We thus see that the problem of unemployment and underemployment in less developed economies has been intensified by the technological dualism caused by the use, in the modern manufacturing and mining, of capital-intensive technology imported from abroad which is wholly unsuitable to the factor endowments of these less developed economies with abundant labour and small capital. It will be seen from Table 4.4 that in India 31 per cent of population has access to improved sanitation facilities as against 100 per cent in the United States and United Kingdom. The world is divided into two parts- one of the poor and the other of the rich which is continuously becoming richer. The poor countries will agitate more and more for a share in prosperity and, consequently, their demand on the richer countries will grow louder and louder in volume and intensity. Various developing countries differ a good deal from each other. As against this, population growth rate in high income countries (i.e., developed countries) was 0.7% per annum. This dualistic character of these economies has been held to be the cause of unemployment and underemployment existing in them. The per capita income of the people of India is very low in comparison with that of the USA, the UK, Canada, Australia and Japan. What are some differences between these two locations? To conclude, we can say that while there are some common characteristics that are held by developing countries to some degree, there are also several significant differences. For example, the recent estimates reveal that about 28 per cent of India’s population (i.e. Development aid through federal governments and other agencies is distributed in order to help tackle the social, political, economic, and environmental problems faced by these countries. 1. Higher contribution of agriculture to national income. According to the World Bank estimates for the year 1995, average per capita income of the low income countries is $ 430 as compared to $ 24,930 of the high-income countries including U.S.A., U.K., France and Japan. According to estimates made by ILO given in Table 4.1 on an average 61 per cent of workforce of low-income developing countries was employed in agriculture whereas only 19 per cent in industry and 20 per cent in services. Share Your PDF File Content Guidelines 2. The dominance of agriculture in developing countries can be known from the distribution of their workforce by sectors. There may also be high levels of pollution and a high percentage of people with infectious diseases. As discussed in the previous lecture, developing countries are characterized by low per- capita income and human development. Low rate of saving and capital formation. On the other hand, in the large traditional sector covering agriculture, handicrafts and allied activities, in which there exist extended family system and self-employment, labour-intensive technology is generally used. DEVELOPING COUNTRIES. Economics, Developing Countries, Characteristics of Developing Countries. Human capital – education, health and skills – are of crucial importance for economic development. However, it is significance to note that the increase in population in non-agriculture sector has found employment not in organised industry and services sector but in informal sector where labour productivity is as low as in agriculture. By utilising their natural resources accelerating rate of capital formation and making progress in technology they can increase their levels of productivity and income and break the vicious circle of poverty operating in them. Secondly, as emphasized by Amartya Sen, development is needed so that people should enjoy freedom and life of valued functioning. Famous Lewis model of economic development with unlimited supplies of labour and Fei-Ranis model of “Development in a Labour Surplus Economy” explain how in dualistic economies, the unemployed and underemployed labour in the traditional sector is drawn into a modern high productivity sector. On the contrary, in high income, that is, developed countries only 4 per cent of their workforce is employed in agriculture, while 26 per cent of their workforce is employed in industry and 70 per cent in services. Lower levels of education and skills are not conducive for the development of new industries and for absorbing new technologies to achieve higher levels of production. Besides, it is important to note though at present (2011-12) agriculture employees 50 per cent of workforce, it contributes only 13 per cent to its GDP. 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