Rameshwar's IAS

Features of an Underdeveloped Economy

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Simply put, an underdeveloped nation is one whose real per capita income is lower than that of rich nations like those of Western Europe, Canada, and the US in general. The world of today depicts the use of contrast. Even though there are only a few countries, some of them are extremely wealthy. On the other hand, less than a third of the world's population, which lives in more of Asia, Africa, Latin America, or Eastern Europe, can barely make ends meet. The majority of people in these nations endure misery, hunger, and squalor. When we consider that these poor nations account for 70% of the world's population and have a 15% share of global income, the contrast seems even more striking. On the other hand, the wealthier nations account for more than seventy percent of global income, despite having only one-sixth of the world's population. Typically, a developing nation is thought to be capable of significant income paper improvement.

1. More reliability upon Primary Sector - The majority of developing nations' economies are dominated by agriculture. Agriculture requires a larger workforce due to its lack of technological advancement. This is because there is a lack of capital formation and secondary and tertiary sectors that are less progressive. However, when compared to the agricultural workforce in developed nations, the agricultural workforce in developing nations does not make a significant contribution. In underdeveloped nations, agriculture employs 60 to 80 percent of the population on average. Due to the inability of agriculture to sustainably employ all of its population, countries that rely solely on agriculture are likely to be unprogressive. Both the agricultural sector and the industrial sector would benefit from one another's development, which would also accelerate economic growth.

2. Capital Formation - Capital scarcity is a persistent problem in developing nations. One of the reasons for the low per capita income is this lack of capital. Capital poor, low savings, and low investment economies are all terms that can be used to describe underdeveloped nations. The tendency to save and the absence of compelling incentives for investment are the root causes of this low level of capital formation. The family's capacity to save money is impacted by high population growth. As a result, the underdeveloped economy is unable to make investments in social overhead capital, opening new industries, or modernizing agriculture. As a result, the economy remains primitive. People living in underdeveloped nations generally lack entrepreneurial spirit.

3. High Poverty and Malnutrition - The pervasiveness of malnutrition and poverty is one of the most important characteristics of underdeveloped nations. Rural areas, where more than 70% of the population lives, are more likely to experience poverty and malnutrition. In these labor-intensive economies, the per capita income of families is influenced by members who earn less and those who spend more. Lower purchasing power is a result of lower income. When compared to developed nations, women and children in developing nations have significantly higher rates of nutritional anemia. Nutritional anemia has been made worse by eating fewer calories than needed. As a result, children and adults alike appear stunted, and the mortality rate is quite high. India, Bangladesh, Pakistan, Bhutan, and Nepal, among other less developed nations, have higher maternal mortality rates than developed nations.

4. Under Utilization of Natural Resources - Natural resources are substantial in a lot of underdeveloped nations worldwide. However, none of these natural resources have been properly exploited, so they have either remained untapped or underutilized. The eastern part of India is rich in mineral resources, and Africa has a lot of potential for hydropower. In a similar vein, neither South African nor African forests have fully utilized their potential. It is said that India's potential for irrigation would be increased if river projects were prioritized.

5. Under Utilization of Labour - Underdeveloped nations typically have a surplus of labor. The majority of labor, particularly in rural areas, is underemployed, unemployed, or masked as unemployed, as in the agricultural industry. There is a serious lack of use for this labor. Despite their willingness to work, they do not receive the required number of days off. Per capita income is affected by underemployment and veiled unemployment. The women and children of many agricultural and casual laborers are unable to receive even the most fundamental health care and education because of their extreme poverty.

6. Economic Structure - Dualism, in which the traditional subsistence sector and the modern sector coexist, is another important feature of underdeveloped nations. Urban areas are home to the modern sector, while rural areas are home to the traditional subsistence sector. Technology rarely moves from the modern sector to the traditional sector. Regional dualism and cultural dualism are two other types of dualism that are prevalent in these nations. The dualism in question is a roadblock to progress. Dualism is a factor in inequality in developing nations.

7. Technological Backwardness - Economic backwardness is a direct result of technological backwardness in developing nations. Due to a lack of education, technical training, and experience, many developing nations still suffer from very low levels of technological capability. Developing nations remain dependent on outside knowledge and expertise as a result of this low level of technological capabilities, which slows the rate of technological change and economic expansion.

8. Unchecked Population Growth - Underdeveloped nations' economic development is impacted by rapid population growth. Another characteristic of population growth in developing nations is that it is higher in rural areas and among those with lower incomes than in urban areas and among those with higher incomes. Because of populace development, a sizable level of assets in high populace development immature nations is spent on utilization as opposed to on speculation and capital arrangement. Underdeveloped nations' income, employment, and capital formation scenarios are impacted by overpopulation.

9. Urbanization and Environmental Degradation - Rural to urban migration accounts for the majority of urbanization and population growth in developing nations. It is referred to as "the transgression of rural poverty to urban areas" by some social scientists. This population, which has moved around unevenly, mostly lives in urban slums with few basic amenities. Both the employment situation in urban areas and environmental sanitation suffer as a result of this. Urban renewal is the goal of the money that must be spent on capital formation.

10. Poor Infrastructure - Poor infrastructure is a characteristic of countries that are underdeveloped. It refers to the poor quality and quantity of infrastructure, including roads, electricity, drinking water, and so on. Development relies heavily on infrastructure. Additionally, capital deficiency prevents many developing nations from meeting their social infrastructure needs, such as health and education facilities. These nations are unable to make investments in vital infrastructure projects like hydroelectricity and irrigation.

11. Political Instability and Poor Governance - Political instability is a feature of many developing nations. It is possible to cite Pakistan and Bangladesh as examples from South Asia. Regional separatism, ethnic and religious extremism, and political instability all pose serious threats to these developing nations' development. Underdeveloped nations frequently exhibit a lack of development-minded political and administrative attitudes. In these nations, coalition politics and the multiparty system are also developing slowly. Political dependability and uprightness, and great administration are requirements for a quick turn of events. In these nations, political and bureaucratic corruption impedes development.

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