Concept of Underdevelopment

Concept of Underdevelopment

Tags:      Gig Economy     Economy     WTO     WTO Public Stockholding     MSP     Economic Growth     Masala Bond     Environmental Performance Index     Forecast of Economic Growth     Functions of the Finance Commission

Underdevelopment is characterized by things like a low real per capita income, widespread poverty, a lower literacy rate, a short life expectancy, and underutilization of resources, among other things. A significant portion of the state's population suffers from poverty and material deprivation as a result of the economy's underdevelopment. It is important to note that although underdevelopment is a relative term, it perpetuates absolute poverty. The comparison of quality of life between underdeveloped and developed economies is what distinguishes them, so the idea is relative. Despite the fact that the concept of underdevelopment is a relative one, absolute poverty is maintained by it. The term "absolute poverty" refers to a situation in which people are unable to meet even their most fundamental needs for food, clothing, and shelter. In point of fact, they belong to a class of people who constantly strive for survival. As a result, underdevelopment and absolute poverty coexist, or it perpetuates absolute poverty.

Characteristics of Underdeveloped Economies

It is challenging to locate an underdeveloped economy that exemplifies all of the characteristic features of underdevelopment. They have a variety of physical and human resources, sociopolitical conditions, and cultures, despite the fact that the majority of them are poor. The following are some characteristics that are shared by the majority of underdeveloped nations worldwide:

1. Low Per capita Income - In comparison to developed nations, almost all of the world's underdeveloped nations have low per capita incomes. The low per capita income in underdeveloped nations contributes to the low standard of living there. The Human Development Index, which is produced by the United Nations Development Programme (UNDP), also reflects the low standard of living of people living in underdeveloped nations. Underdeveloped nations have a very low HDI, whereas developed nations have a very high HDI.

2. Economic Disparities - Another characteristic of underdeveloped nations is a high wealth and income inequality. In these nations, a significant portion of the national income is shared by a small number of people, while a large number of people only receive a meager amount to live on. Even in developed nations, economic inequality is not as severe as it is in developing nations.

3. Low formation of capital - Due to the high prevalence of poverty and low income levels, underdeveloped economies have a very low rate of capital formation.

4. Production Methods That Are Out of Date - Underdeveloped economies rely on out-of-date technology for production. Research and development spending decrease when capital is lacking.

5. High Dependency Burden and High Population Growth Rate - These nations are characterized by a high population growth rate.

6. Low Labor Productivity - As a result of a lack of skill, underdeveloped economies are characterized by low labor productivity. In underdeveloped economies, natural resources are not used to their full potential. They have very little ability to take advantage of them.

Another characteristic of developing nations is large-scale unemployment.

A significant number of people in developing economies are employed in the primary sector. However, these nations lack a well-developed primary sector. Backwardness of the infrastructure in underdeveloped nations' economies and social infrastructures are nearly at their lowest levels. Underdeveloped nations export primary products like agricultural goods, minerals, petroleum oil, and so on at a low volume. And import finished goods, particularly household goods. Underdeveloped nations suffer greatly from unfair trade terms.