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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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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.

6 thoughts on “Characteristics of Developing Countries”

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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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Common Characteristics of Developing Countries Essay

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Population and Environment

​the international debt crisis, foreign aid, works cited.

Developing countries share certain unique common characteristics. It is evident that most of these nations still grapple with issues concerning health, social amenities, and education. Challenges associated with public health include some of the common characteristics that may be noted within developing states (Todaro & Stephen 12). Their health systems are underdeveloped and a remarkable percentage of the population cannot access adequate health care.

This challenge may be due to a lack of resources to establish and decentralize sufficient and well-equipped health care service delivery facilities to the population. The local populations are highly affected. Other public health challenges compound to cause high mortality and morbidity rates within such nations.

Lack of proper education and human resources include other similar problems faced by the developing nations. Due to low-income levels, most populations within the developing nations cannot access quality education. Moreover, the systems of formal learning within such countries are ineffective (Todaro & Stephen 19). These education systems are not designed in a transformative manner. Consequently, there is a generation of an impaired workforce in the employment industry.

This challenge has contributed to poor performance within key industrial firms and business organizations. Frequent tensions are arising from civil wars within these developing states. Particularly, this is common within African nations.

The chief causes of such conflicts may include conflicts on natural resources, political instabilities, and tribal hatred. The developing nations encounter the severe impacts of disasters. These include both natural and technological disasters. This occurs mainly because they lack proper and comprehensive mechanisms for disaster prevention, management, and mitigation. Issues of food insecurity and safety usually confront these nations.

This is caused by a lack of initiative to employ effective agricultural systems with adequate technology to enhance food production. Lastly, there are prevalent challenges associated with housing and shelter (Todaro & Stephen 31). Most citizens of these countries lack access to improved and standardized housing facilities. Indeed, this is evident from the high number of slums and informal settlements within these nations. Developing nations indeed share many challenges.

The environment forms the fundamental orientation of both human, animal, and plant life. The study of eco-biology indicates the basic interactions between different components of the environment. All humans depend on the resources found within the environment. Analytically, this observation potentiates a critical fact. There is a population a given environment can sustain. Of course, this occurs only within a specified period (Todaro & Stephen 37).

Human beings normally fight for the resources available within the general environment. Therefore, whenever scarcity of these environmental resources arises, there is a likelihood that conflicts might also emerge. Increased population strains the available resources to a negligible level.

Ideally, the environment forms the basic platform for human life. All other supportive services and resources of importance to human nature emerge from the environment. It is correct to insinuate that the population and environment share a mutual relationship. Notably, this means that the environment can dictate the population it can sustain (Todaro & Stephen 40). The environment directly manipulates population growth.

This is because the environment is the main source of food and other crucial resources. These are vital for human beings to form associations and procreate. Perhaps, this explains the lack of human habitation within desert regions. The effects of population growth on the environment are unavoidable.

The Malthusian theory explains this relationship in a very empirical manner (Todaro & Stephen 45). Human beings strain the environment through various anthropogenic activities. These lead to environmental degradation and pollution. Observably, highly populated regions are characterized by a high level of environmental pollution and degradation. The environment that supports a high population growth rate has enough resources. These resources are appropriate for effective and uniform human growth and development. Generally, there is a direct association in association between population growth and the environment. However, it is significant to examine other interactions and interrelations that affect this association.

Trade is an important component of economic development. In the recent past, countries have adopted transformative measures. These measures are geared towards enhancing the level of their domestic and international participation in trade. Scholars and personalities have supposed different theoretical models regarding local, regional, and global trade. Ha-Joon Chan is one of such personalities that have contributed immensely to the understanding and analysis of trade (Todaro & Stephen 54).

His reiterations concerning the movement towards free trade remain strategic and sound. According to Ha-Joon Chan, the movement towards free trade will make the rich nations to “kick away the ladder.” The ladder herein refers to the means through which these rich nations gained their success. This statement implies that most rich nations succeeded due to restrictions on international trade.

Most protocols on global and regional trade have been punitive to certain nations. However, some of the rich nations have gained remarkably from such protocols and regulations. This explains why Ha-Joon Chang observes the significance of free trade in alleviating these partial regulations. Free trade will enable developing nations to interact and engage in liberalized international trade. The environment will have minimal restrictions based on international boundaries, currencies, and the quality of goods among other things (Todaro & Stephen 59).

This state of activities is crucial for most emergent economies that have encountered severe discrimination within the international trading platform. Ha-Joon Chang notes that most rich nations will lose the channels and loopholes of wealth creation through unnecessary restrictions. Generally, this is a form of a liberalized situation. The statement focuses on third world states and their mode of acquiring wealth.

The international debt crisis has a long and interesting history. Most countries decided to devise their economic policies and principles following their early independence. In Africa, some of the post-independent economic policies were based on the systems of particular colonizers. The cold war marked the beginning of the international debt crisis (Todaro & Stephen 78). The period was marred with a lot of borrowing from wealthy foreign governments and banks.

Observably, these loans were provided at attractive and discounted rates of interest. These transactions were done minus the interests of the welfare of average citizens within the borrowing nations. This situation was propagated by the fear of the US that some countries could be transformed into a communist. These fears made poor nations to take huge loans at uneconomical logic and rates.

The “oil crisis” marked the second stride in the development of the debt crisis. This involved the extreme hiking of prices by the oil-rich nations. After gaining huge money from hiked oil prices, these nations deposited their money within western financial institutions. The changes in the value of the US dollar catapulted the process. At the end of the 1970s, there was a major financial shift. High-interest rates in the world markets struck the poor nations heavily (Todaro & Stephen 87).

Oil prices doubled and basic commodities became very expensive. During the era of President Reagan, these poor nations paid heavily on their debts and loosed the value of their exports. The debt crisis later emerged in the 1980s. The entire rot was unearthed when Mexico threatened to default her repayments in 1982. The consequent steps are taken only safeguarded the creditors. Nonetheless, these initiatives failed to address the debt crisis.

There are several debates concerning foreign aid and its capacity to initiate growth and development. There is a generalized belief that foreign aid can buy growth. However, this is only possible under certain prescribed conditions. For instance, foreign aid must be channeled to areas in which it can perform the highest good. Foreign aid only buys growth within nations that have adopted the sound and proper policies.

These frameworks must relate to financial, trade, and fiscal issues. From here, is imperative to evaluate the characteristics of a “good policy” (Todaro & Stephen 92). According to some economists, the objective of the aid must be stated modestly. In essence, a particular aid ought to offer some benefits to the poor. Perhaps, this is when it might qualify to buy growth. Generally, there are severe debates on this issue and most assumptions remain contestable.

Todaro, Michael P, & Stephen C. Smith. Economic Development . Boston: Pearson Addison Wesley, 2009. Print.

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IvyPanda. (2021, February 13). Common Characteristics of Developing Countries. https://ivypanda.com/essays/common-characteristics-of-developing-countries/

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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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2 thoughts on “Characteristics of Developing Economies”

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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Lecture 2 Major Characteristics of Developing Countries

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There are certain characteristics and features by which a distinction is made between developed and developing countries, and these are well-known characteristics. but what the author is trying to present in this article is to show some new or additional characteristics are the reasons for underdevelopment and is not a result of it. That is why the author believes that these additional criteria are what must be taken care of and focused on when trying to bring about development in developing countries, because if it taking place the development is achieved immediately. The world has been running towards recognized standards and indicators to distinguish between developed and developing countries for several decades, However, it is useless. Development is never achieved in developing countries, the situation of the poor around the world is getting worse, and the debts of developing countries are on the increase. With the Corona pandemic, it became clear to all of us that the world needs new indicators and other criteria that must be relied upon when making this distinction between developed and developing countries. The Corona pandemic had the merit of uncovering economic terms that have become sterile and do not present new, and it is time to introduce new and useful in the field of sustainable development in order to improve the conditions of the poor in these countries and providing them with decent livelihoods.

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Gr. 11 Economics T3 W4 Lesson: Economic Pursuits - Economic Growth

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