03 common characteristics of developing countries

Common characteristics of developing countries

1. Common Characteristics of Developing Countries

2. Common Characteristics of Developing Countries Introduction: There are about 6.9 billion people living in the world. 1/6 th of the population is living in least developed countries having a per capita income of around $600 a year. The poor countries with low per capita income are commonly known as LDCs (Least Developed Countries), UDCs (Under Developed Countries), Third World Countries, or Developing Countries. “Under developed countries are those which compared with the advanced countries are under equipped with capital in relation to their population and natural resources”. ( Prof R. Nurkse ) “A country is said to be under developed which is characterized by the co-existence in greater or less degree, of unutilized or underutilized manpower on the one hand and of unexploited natural resources on the other”. ( Stanley) “An under developed country is one whose per capita income is lower than US, UK, Canada and the Western European Countries”. (United Nations)

3. Common Characteristics of Developing Countries Common Characteristics of LDCs: According to United Nations’ data, there are 130 developing countries in the world. While almost all are poor in money terms; but there are variations in their cultural, social, political and economic conditions. Despite of this, LDCs share some common characteristics which are as follows: · Burden of International Debt: Most of the developing countries are depending upon foreign economic loans to meet the short fall in their savings and to finance their projects. As the years pass, this burden is increasing on Pakistan. Pakistan’s outstanding external debt is around $ 58 billion . · Low per capita income: Majority of the people living in LDCs are poor. Poverty is reflected in low per capita income. They are unable get proper food, education, shelter, clothes, and other basic needs. In Pakistan the per capita income is $1,254 and the literacy rate is 57% . · Unproductive Uses of Funds: The limited savings that exist in LDCs is mostly used for unproductive purposes and excessive military expenses. These expenditures provide few economic development benefits.

4. Common Characteristics of Developing Countries Unsuitable Investment Decisions: It is also observed that funds available are usually invested in those capital goods that are not suitable for LDCs. For example, the amount spent on solar energy may have been more useful if spent on hydel projects. · Agriculture as Main Occupation: In LDCs most of the people live in rural areas so their main occupation is agriculture. They usually use primitive and old fashioned techniques of productions so the yield per acre is generally low. In Pakistan about 45% of the labour force is employed in agriculture sector. · Under-Utilization of Natural Resources: Most of the LDCs are rich in natural resources but these resources are usually unutilized, underutilized, or misutilized . This is mainly due to lack of capital and primitive (old) techniques. · High Rate of Population Growth: In LDCs the population growth rates are very high. The development made by low per capita income and low capital formation is swallowed up by increased population. As a result there is no improvement in living standard of the people. In Pakistan the population growth rate is 2.07% which is very high.

5. Common Characteristics of Developing Countries Unemployment and Disguised Unemployment: Vast unemployment and disguised unemployment is another notable feature of LDCs. In Pakistan unemployment rate is estimated to be 5.6% (7) . · Low Level of Productivity: In LDCs the labour is inefficient, not properly trained and educated, that’s why level of productivity is very low. · Lack of Initiative: The people of LDCs have less capital that is why they do not afford to take any risk. They fear to put their investments in new projects. There is lack of dynamic leadership in LDCs. · Deficiency of Capital: Deficiency of capital is another common characteristic of LDCs. The capital deficiency is mainly due to: o Low per capita income o Low rate of savings o Low rate of investment o Inequalities of wealth o More expenditure on consumption, etc. · Backward State of Technology: All the LDCs are in the backward state of technology. This backwardness is due to: o Lack of capital o Misallocation of resources, etc.

6. Common Characteristics of Developing Countries · Dependence on Exports of Primary Products: LDCs are mostly producing primary products (agricultural products, raw materials, etc ) and exporting them to developed countries. Then these LDCs import finished products, capital goods and machinery from the developed countries. · Unskilled Workers: LDCs are usually suffering from an abundance of unskilled, untrained, uneducated workers. The quality of population as judged by its health, education, and skills is very poor. · Brain Drain: There is an outflow of best and brightest students from the LDCs (Brain Drain). Many of these students do not return to their home countries because they get better salaries and other benefits in developed countries. In this way they serve the developed countries and add to their economic development. · Government Control by Wealthy Persons: In LDCs generally wealthy persons get hold of government offices and poor masses remain unable to get access to them. These wealthy people are more interested in their personal interests rather than national interests. · Dualistic Economy: Dualism means social and economic division in the economy. In LDCs some areas and sectors are well developed and at the same time there are some regions and sectors which lack even basic needs. The rich is getting richer and the poor is getting poorer.

7. Common Characteristics of Developing Countries · Improper Capital Markets: In LDCs the capital markets are not properly organized. That is why the savings are not efficiently channeled to productive projects. · Poor Transportation System: There is non-availability of proper roads, and other transportation means which increases the cost of production of LDCs. · Lack of Power Resources: Usually the LDCs are not able to generate sufficient electricity for running their industries. In Pakistan there is a huge problem of load shedding. Moreover, LDCs also have to depend upon others for their oil, gas, and other power needs. · Political Instability: Many of the LDCs face the problem of political instability. That is why these countries remain unable to get benefit from long-term productive projects. · Hoarding: In LDCs the people generally have a habit to store precious metals. They even keep basic necessities stored in their godowns and wait for the prices to rise. This leads to high prices, and finally to low savings and investment. Summing Up: As discussed earlier, each and every country has its different political, social, cultural, and economic conditions, yet there are many characteristics which are similar in almost all the developing countries. A developing economy is characterized by many of the above characteristics.

8. Common Characteristics of Developing Countries Thank You