characteristics of developing countries essay grade 11

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.

Characteristic # 4. Rapid Population Growth and Disguised Unemployment:

The diversity among developing economies is perhaps nowhere to be seen so much in evidence as in respect of the facts of their population in respect of its size, density and growth. While we have examples of India, Pakistan and Bangladesh with their teeming millions and galloping rates of population growth, there are the Latin American countries which are very sparsely populated and whose total population in some cases numbers less than a single metropolitan city in India and China. In several newly emerging countries of Africa too and in some of the Middle Eastern countries the size of their population cannot be regarded as excessive, considering their large expanse. The South- East and Eastern Asia, on the other hand, have large populations.

However, there appears to be a common feature, namely, a rapid rate of population growth. This rate has been rising still more in recent years, thanks to the advances in medical sciences which have greatly reduced the death rate due to epidemics and diseases. While the death rate has fallen sharply, but there has been no commensurate decline in birth rate so that the natural survival rate has become much larger. The great threat of this rapid population growth rate is that it sets at nought all attempts at development in as much as much of the increased output is swallowed up by the increased population.

One important consequence of this rapid rate of population growth is that it throws more and more people on land and into informal sector to eke out their living from agriculture, since alternative occupations do not simultaneously develop and thus are not there to absorb the increasing numbers seeking gainful employment. The resultant pressure of population on land and in informal sector thus gives rise to what has been called “disguised unemployment”.

Disguised unemployment means that there are more persons engaged in agriculture than are actually needed so that the addition of such persons does not add to agricultural output, or putting it alternatively, given the technology and organisation even if some of the persons are withdrawn from land, no fall in production will follow from such withdrawal. As a result, marginal productivity of a wide range of labourers employed in agriculture is zero.

It will be seen from Table 4.2 that in 2009, population of the world was estimated at 6,775 million in 2009 and its annual population growth in 1990-2009 was 1.3 per cent. The population growths in low-income developing countries have been 2.3 per cent per annum during 1990-2009 and of middle income developing countries as a whole has been 1.3 per cent per annum. As against this, population growth rate in high income countries (i.e., developed countries) was 0.7% per annum. That is, population in developing countries has been growing at a much faster rate as compared to the developed countries.

In Table 4.2, we have given the dependency ratio on the working population. Both children and boys below the age of 15 years (i.e., young ones) and the old people above the age of 65 years and above represent dependency burden as they are unproductive members and are financially dependent on the working population.

The bad effect of this dependency burden for developing countries is that it reduces saving rate of the community and therefore adversely affects economic growth. It will be seen from Table 4.2 that the dependency burden of young persons (i.e., below the age of 15 years) in case of low-income countries is very high at 69%, whereas the dependency burden of old people on the working population is much lower, only 6 per cent. As against this, for high income countries dependency burden of old persons is relatively very high being 23 per cent.