characteristics of developing countries essay pdf

The countries in which the process of development has started but is not completed, have a developing phase of different economic aspects or dimensions like per capita income or GDP per capita, human development index (HDI), living standards, fulfillment of basic needs, and so on. The UN identifies developing countries as a country with a relatively low standard of living, underdeveloped industrial bases, and moderate to low human development index. Therefore, developing nations are those nations of the world, which have lower per capita income as compared to developed nations like the USA, Germany, China, Japan, etc. Here we will discuss the different characteristics of developing countries of the world.

Developing countries have been suffering from common attributes like mass poverty, high population growth, lower living standards, illiteracy, unemployment and underemployment, underutilization of resources, socio-political variability, lack of good governance, uncertainty, and vulnerability, low access to finance, and so on.

Developing countries are sometimes also known as underdeveloped countries or poor countries or third-world countries or less developed countries or backward countries. These countries are in a hurry for economic development by utilizing their resources. However, they are lagging in the race of development and instability. The degree of uncertainty and vulnerability in these countries may differ from one to another but all are facing some degree of susceptibility and struggle to develop.

The common characteristics of developing nations are briefly explained below.

Major Characteristics of Developing Countries

Low Per Capita Real Income

The real per capita income of developing countries is very low as compared to developed countries. This means the average income or per person income of developing nations is little and it is not sufficient to invest or save. Therefore, low per capita income in developing countries results in low savings, and low investment and ultimately creates a vicious cycle of poverty. This is one of the most serious problems faced by underdeveloped countries.

Mass Poverty

Most individuals in developing nations have been suffering from the problem of poverty. They are not able to fulfill even their basic needs. The low per capita in developing nations also reflects the problem of poverty. So, poverty in underdeveloped countries is seen in terms of lack of fulfillment of basic needs, illiteracy, unemployment, and lack of other socio-economic participation and access apart from low per capita income.

Rapid Population Growth

Developing countries have either a high population growth rate or a larger size of population. There are different factors behind higher population growth in developing countries. The higher child and infant mortality rates in such countries compel people to feel insured and give birth to more children. Lack of family planning education and options, lack of sex education, and belief that additional kids mean additional labor force and additional labor force means additional income and wealth, etc. also stimulate people in developing countries to give birth to more children. This is also supported by the thought of conservatism existed in such nations.

The Problem of Unemployment and Underemployment

Unemployment and underemployment are other major problems and common features of developing or underdeveloped nations. The problem of unemployment and underemployment in developing countries is emerged due to excessive dependency on agriculture, low industrial development, lack of proper utilization of natural resources, lack of workforce planning, and so on. In developing nations, the problem of underemployment is more serious than unemployment. People are compelled to engage themselves in inferior jobs due to the non-availability of alternative sources of jobs. The underemployment problem in high extent is found especially in rural and back warded areas of such countries. 

Excessive Dependence on Agriculture

The majority of the population in developing nations is engaged in the agriculture sector, especially in rural areas. Agriculture is the only sole source of income and employment in such nations. This sector has also a higher share of the gross domestic product in poor countries. In the case of the South Asian economies, more than 70 percent population is, directly and indirectly, engaged in the agriculture sector.

Technological Backwardness

The development of a nation is a positive and increasing function of innovative technology. Technological use in developing countries is very low and used technology is also outdated. This causes a high cost of production and a high capital-output ratio in underdeveloped nations. Because of the high capital-output ratio, high labor-output ratio, and low wage rates, the input productivity is low and that reduces the gross domestic product of the nations. Illiteracy, lack of proper education, lack of skill development programs, and deficiency of capital to install innovative techniques are some of the major causes of technological backwardness in developing nations.

Dualistic Economy

Duality or dualism means the existence of two sectors as the modern sector or advanced sector and the traditional or back warded sector within an economy that operates side by side. Most developing countries are characterized by the existence of dualism. Urban sectors are highly advanced and rural parts are having the problems like a lack of social and economic facilities. People in rural areas are majorly engaged in the agriculture sector and in urban areas they are in the service and industrial sectors of the economy.

Lack of Infrastructures

Infrastructural development like the development of transportation, communication, irrigation, power, financial institutions, social overheads, etc. is not well developed in developing nations. Moreover, developed infrastructure is also unmanaged, and not distributed efficiently and equitably. This has created a threat to development in such nations.

Lower Productivity

In developing nations, the productivity of factors is also low. This is due to a lack of capital and managerial skills for getting innovative technologies, and policies and managing them efficiently. Malnutrition, insufficient health care, a healthy support system, living in an unhygienic environment, poor health and work-life of workers, etc. are factors that are attributed to lower productivity in developing nations.

High Consumption and Low Saving

In developing countries, income is low and this causes a high propensity to consume, a low propensity to save and capital formation is also low. People living in such nations have been facing the problems of poverty and they are being unable to fulfill most of their needs. This will compel them to expend more portion of their income on consumption. The higher portion of consumption out of earned income results in a lower saving rate and consequently lower capital formation. Ultimately these countries will depend on foreign aid, loans, and remittance earnings that have limited utility to expand the economy.   

The above-explained points show the state and characteristics of developing countries. Apart from explained points, excessive dependency on developed nations, having inadequate provisions of social services like education facilities, health facilities, safe drinking water distribution, sanitation, etc., and dependence on primary exports due to lack of development and expansion of secondary and tertiary sectors of the economy, etc. are also major characteristics of developing countries of the world. These countries are affected more severely by the economic crisis derived from the coronavirus of 2020. So, challenges to development for developing nations have been added furthermore. In a summary, the major characteristics of developing countries are presented in the following table.

Ahuja, H.L (2016). Advanced Economic Theory . New Delhi: S Chand and Company Limited.

Todaro, M.P. & Smith, S.C. (2009). Economic Development . New York: Pearson Education.

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thanks for the reality points they have fully drawn a picture of poverty. my question is how can dualistic economy be handled as away of reducing poverty?

I really enjoyed reading this So true

The lesson is so nice I understand and I enjoy the lesson

The lesson is good and points are easy to understand and master Thank you for the good services

These are indicators of poverty as proposed by the Global North’s perception of poverty in Global South. Why not ask the Global South to give their voice to what define poverty in their right.

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• > Economic Development
• > Characteristics and Institutions of Developing Countries

Book contents

• Frontmatter
• List of Figures and Tables
• Abbreviations and Measures
• Preface to the Fourth Edition
• PART I PRINCIPLES AND CONCEPTS OF DEVELOPMENT
• 1 Introduction
• 2 The Meaning and Measurement of Economic Development
• 3 Economic Development in Historical Perspective
• 4 Characteristics and Institutions of Developing Countries
• 5 Theories of Economic Development
• PART II POVERTY ALLEVIATION AND INCOME DISTRIBUTION
• PART III FACTORS OF GROWTH
• PART IV THE MACROECONOMICS AND INTERNATIONAL ECONOMICS OF DEVELOPMENT
• PART V DEVELOPMENT STRATEGIES
• Bibliography

4 - Characteristics and Institutions of Developing Countries

from PART I - PRINCIPLES AND CONCEPTS OF DEVELOPMENT

Scope of the Chapter

This chapter surveys the characteristics of developing countries, with particular emphasis on low-income economies. It looks at income distribution, political framework, family system, relative size of agriculture and industry, technology and capital levels, saving rates, dualism, international trade dependence, export patterns, population growth, labor force growth, literacy, and skill levels, and the nature of economic and political institutions, including governance; democracy and dictatorship; transparency; social capital; the state bureaucracy; tax collecting capability; a legal and judicial system; property and use rights; statistical services and survey data; and land, capital, insurance, and foreign exchange markets. The last section examines rent seeking and corruption and their relationships to state weakness and failure. Subsequent chapters will expand on economic patterns of development.

Varying Income Inequality

As economic development proceeds, income inequality frequently follows an inverted U-shaped curve , first increasing (from low-to middle-income countries), and then decreasing (from middle-to high-income countries). Even so, the proportion of the population in poverty drops as per-capita income increases (see Chapter 6).

Political Framework

VARYING POLITICAL SYSTEMS

In 2000–01, Freedom House (2002) ranked about one-fourth, 34 of 137 LDCs, as free, that is, enjoying political rights and civil liberties. Political rights mean not just a formal electoral procedure but that “the voter [has] the chance to make a free choice among candidates … and candidates are chosen independently of the state.” Civil liberties implies having rights in practice, and not just a written constitutional guarantee of human rights.

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• Characteristics and Institutions of Developing Countries
• E. Wayne Nafziger , Kansas State University
• Book: Economic Development
• Online publication: 05 June 2012
• Chapter DOI: https://doi.org/10.1017/CBO9780511805615.005

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• Corpus ID: 32252340

Diverse Structures and Common Characteristics of Developing Nations

• Published 2002
• Economics, Political Science, Sociology

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Developing Countries: Modern Perspectives on Ideas for Upliftment

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Less-developed countries ; Underdeveloped countries

Development , for the purposes of this entry, can be defined as the process of gaining competence and sufficiency in the provision of current and future necessities that improve the quality of life, such as quality education, job opportunities, well-functioning institutions, healthcare and nutrition, and infrastructure beyond basic levels.

Developing country is characterized by some features of a developed nation and some of an underdeveloped nation. Countries like China and India have prominent features of a developed country that include sufficient investment in institutions, education, healthcare, infrastructure, agriculture, and those in the private sector, thereby promoting entrepreneurship. Developing countries however also have many characteristics of underdeveloped countries such as a sizeable proportion of citizens that live below the poverty line. This means that this section of the population cannot...

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Banerjee, S. (2020). Developing Countries: Modern Perspectives on Ideas for Upliftment. In: Leal Filho, W., Azul, A., Brandli, L., Lange Salvia, A., Özuyar, P., Wall, T. (eds) No Poverty. Encyclopedia of the UN Sustainable Development Goals. Springer, Cham. https://doi.org/10.1007/978-3-319-69625-6_13-1

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Common Characteristics of Developing Countries | Economics

Following are some of the basic and important characteristics which are common to all developing economies:

An idea of the characteristics of a developing economy must have been gathered from the above analysis of the definitions of an underdeveloped economy. Various developing countries differ a good deal from each other. 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. Some developing countries are largely dependent on exports of primary products, others do not show such dependence, and others do not show such dependence.

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. Besides, there are lot of differences with regard to levels of education, health, food production and availability of natural resources. However, despite this great diversity there are many common features of the developing economies. It is because of common characteristics that their developmental problems are studied within a common analytical framework of development economics.

Characteristic # 1. Low Per Capita Income :

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The first important feature of the developing countries is their low per capita 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 these estimates for the year 1995, per capita income was $340 in India, $ 620 in China, $240 in Bangladesh, $ 700 in Sri Lanka. 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.

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. Large inequalities in income distribution prevailing in these economies have made the lives of the people more miserable. A large bulk of population of these countries lives below the poverty line.

For example, the recent estimates reveal that about 28 per cent of India’s population (i.e. 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. The situation in other developing countries is no better.

The low levels of per capita income and poverty in developing countries is due to low levels of productivity in various fields of production. 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. 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.

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.

Characteristic # 2. Excessive Dependence on Agriculture :

A developing country is generally predominantly agricultural. About 60 to 75 per cent of its population depends on agriculture and its allied activities for its livelihood. Further, about 30 to 50 per cent of national income of these countries is obtained from agriculture alone. This excessive dependence on agriculture is the result of low productivity and backwardness of their agriculture and lack of modern industrial growth.

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. 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.

The dominance of agriculture in developing countries can be known from the distribution of their workforce by sectors. 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. 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.

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The Third World: Its Origin, Meaning, Definition and Its Problems

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Characteristics of Developing Economies

Even though developing nations have very different backgrounds in terms of resources, history, demography, religion and politics, they still share a few common characteristics. Today, we will go over six common characteristics of developing economies.

Common Characteristics of Developing Economies

1. Low Per Capita Real Income

Low per capita real income is one of the most defining characteristics of developing economies. They suffer from low per capita real income level, which results in low savings and low investments.

It means the average person doesn’t earn enough money to invest or save money. They spend whatever they make. Thus, it creates a cycle of poverty that most of the population struggles to escape. The percentage of people in absolute poverty (the minimum income level) is high in developing countries.

2. High Population Growth Rate

Another common characteristic of developing countries is that they either have high population growth rates or large populations. Often, this is because of a lack of family planning options and the belief that more children could result in a higher labor force for the family to earn income. This increase in recent decades could be because of higher birth rates and reduced death rates through improved health care.

3. High Rates of Unemployment

In rural areas, unemployment suffers from large seasonal variations. However, unemployment is a more complex problem requiring policies beyond traditional fixes.

4. Dependence on Primary Sector

Almost 75% of the population of low-income countries is rurally based. As income levels rise, the structure of demand changes, which leads to a rise in the manufacturing sector and then the services sector.

5. Dependence on Exports of Primary Commodities

Since a significant portion of output originates from the primary sector, a large portion of exports is also from the primary sector. For example, copper accounts for two-thirds of Zambia’s exports.

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Thank you intelligenteconomist.com i love you all! This helped me pass my test and I THINK I want to live again. ps. very sad whats happening in the world.. ;(

To what extent would it be argued that all developing countries share same set of characteristics

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Characteristics of Developing Countries - Economic Notes Grade XI

Commerce notes, scarcity and choice, national income, economic development, natural resources, human resources, agriculture, transportation and communication, foreign trade, public finance, development planning, quantitative analysis in economics, introduction to statistics, collection of data, diagrammatic and graphic presentation of data.

• Characteristics of Developing Countries

Commerce Notes Unit: Economic Development Subject: Economics Grade XI

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Characteristics of Developing Countries A developing country is one where the process of economic development has started but not completed. In developing countries, most people are compelled to live below the poverty line. Thus, developing countries are generally poor countries. The developing countries are also known as underdeveloped countries, least developed countries, and third world countries. Many developing countries are differing from each other in physical, cultural, characteristics, but there are some common characteristics of developing countries which are as follows:

1. General poverty: There is widespread poverty in developing countries. The general living standard of people is very low due to their low income. That is why; they are not able to fulfill their basic necessities like food, shelter, cloth, etc. Majority of people are both in poverty and die in poverty. They live below the poverty line.

2. Rapid population growth: There is rapid population growth in developing countries as compared to developed countries. The average annual growth rate of population in developing countries is about 1.5 % to 3 % whereas, in developing countries, it is about 0.7 % or about 1 %.

3. High dependence on agriculture: Agriculture is the main occupation in developing countries. Majority of the population from 70 % to 80 % are engaged in developing countries whereas in developed countries 15 % or less depends on agriculture. The high dependency on agriculture is due to the low development of the non-agricultural sector.

4. Underutilization of natural resources: Most developing countries are rich in natural resources. The natural resources in developing countries are either utilized or underutilized due to the various difficulties such as shortage of capital, the small size of the market, primitive technology. Nepal is rich in water resource but it is not being properly utilized due to the lack of capital.

5. Dualistic economic: Most developing countries have the mixer of two types of an economic system, modern or marketing economy system, modern or marketing economy and subsistence or traditional economy. A market economy exists in limited urban areas where modern facilities can be utilized and the traditional economy exist in most of the rural areas where there are no modern facilities and life is full of difficulties.

6. Existence of unemployment: The rapid population growth has created the problem of unemployment. Due to the lack of developing agricultural sectors like trade & industries and other services. Most of the increased population has to depend on agriculture provided employment for a few day and other days, they have to remain unemployed.

There are other characteristics of developing countries like worthless social structure, political instability, gender discrimination, lack of skilled technicians, foreign dependency, etc.

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• Key Differences

Know the Differences & Comparisons

Difference Between Developed Countries and Developing Countries

The countries with low industrialization and low human development index are termed as developing countries .

After a thorough research on the two, we have compiled the difference between developed countries and developing countries considering various parameters, in tabular form.

Content: Developed Countries Vs Developing Countries

Comparison chart.

Basis for Comparison	Developed Countries	Developing Countries
Meaning	A country having an effective rate of industrialization and individual income is known as Developed Country.	Developing Country is a country which has a slow rate of industrialization and low per capita income.
Unemployment and Poverty	Comparatively Lower	Generally Higher
Rates	Infant mortality rate, death rate and birth rate is low while the life expectancy rate is high.	High infant mortality rate, death rate and birth rate, along with low life expectancy rate.
Living conditions	Good	Moderate
Generates more revenue from	Industrial sector	Service sector
Growth	High industrial growth.	They rely on the developed countries for their growth.
Standard of living	Generally Higher	Comparatively Lower
Distribution of Income	Equal	Unequal
Factors of Production	Effectively utilized	Ineffectively utilized

Definition of Developed Countries

Developed Countries are the countries which are developed in terms of economy and industrialization. The Developed countries are also known as Advanced countries or the first world countries, as they are self-sufficient nations.

Human Development Index (HDI) statistics rank the countries on the basis of their development. The country which is having a high standard of living, high GDP, high child welfare, health care, excellent medical, transportation, communication and educational facilities, better housing and living conditions, industrial, infrastructural and technological advancement, higher per capita income, increase in life expectancy etc. are known as Developed Country. These countries generate more revenue from the industrial sector as compared to service sector as they are having a post-industrial economy.

The following are the names of some developed countries: Australia, Canada, France, Germany, Italy, Japan, Norway, Sweden, Switzerland, United States.

Definition of Developing Countries

The countries which are going through the initial levels of industrial development along with low per capita income are known as Developing Countries. These countries come under the category of third world countries. They are also known as lower developed countries.

Developing Countries depend upon the Developed Countries, to support them in establishing industries across the country. The country has a low Human Development Index (HDI) i.e. the country have low Gross Domestic Product, high illiteracy rate, educational, transportation, communication and medical facilities are not very good, unsustainable government debt, unequal distribution of income, high death rate and birth rate, malnutrition both to mother and infant which case high infant mortality rate, high level of unemployment and poverty.

The following are the names of some developing countries: Colombia, India, Kenya, Pakistan, Sri Lanka, Thailand, Turkey.

Key Differences Between Developed and Developing Countries

The following are the major differences between developed countries and developing countries

• The countries which are independent and prosperous are known as Developed Countries. The countries which are facing the beginning of industrialization are called Developing Countries.
• Developed Countries have a high per capita income and GDP as compared to Developing Countries.
• In Developed Countries the literacy rate is high, but in Developing Countries illiteracy rate is high.
• Developed Countries have good infrastructure and a better environment in terms of health and safety, which are absent in Developing Countries.
• Developed Countries generate revenue from the industrial sector. Conversely, Developing Countries generate revenue from the service sector.
• In developed countries, the standard of living of people is high, which is moderate in developing countries.
• Resources are effectively and efficiently utilized in developed countries. On the other hand, proper utilization of resources is not done in developing countries.
• In developed countries, the birth rate and death rate are low, whereas in developing countries both the rates are high.

There is a big difference between Developed Countries and Developing Countries as the developed countries are self-contained flourished while the developing countries are emerging as a developed country. Developing Countries are the one which experience the phase of development for the first time. If we talk about developed countries, they are post-industrial economies and due to this reason, the maximum part of their revenue comes from the service sector.

Developed Countries have a high Human Development Index as compared to Developing Countries. The former has established itself in all fronts and made itself sovereign by its efforts while the latter is still struggling to achieve the same.

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July 8, 2015 at 12:47 am

Although still correctly called a developing country, suprisingly, China has a High HDI.

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anonymous says

December 17, 2015 at 4:00 pm

Even though China seems very developed, it is still considered a developing country. This is because there are still high rates of poverty and unemployment and people die at a young age.

kandeepan says

April 24, 2016 at 3:55 pm

you should change the third points that says both developed and developing countries literacy rate is high. it can not be same the literacy rate of both countries. developing literacy relate in most countries are very poor. we can get many good examples from African countries.

Surbhi S says

April 25, 2016 at 4:14 am

You should read the third point carefully, because it has been written there that the illiteracy rate is high in developing countries.

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