DEVELOPED ECONOMIES

A DEVELOPMENT COUNTRY, INDUSTRIALIZED

COUNTRY, OR MORE ECONOMICALLY DEVELOPED
COUNTRY{MEDC} IS A SOVEREIGN STATE THAT HAS A
HIGHLY DEVELOPED ECONOMY AND ADVANCED
TECHNOLOGICAL INFRASTRUCTURE RELATIVE TO OTHER
LESS INDUSTRIALIZED NATIONS. MOST COMMONLY, THE
CRITERIA FOR EVALUATING THE DEGREE OF ECONOMIC
DEVELOPMENT ARE GROSS
DOMESTIC PRODUCT (GDP),GROSS NATIONAL
PRODUCT(GNP),THE PER CAPITA INCOME, LEVEL OF
INDUSTRIALIZATION, AMOUNT OF WIDESPREAD
INFRASTRUCTURE AND GENERAL STANDARD OF
LIVING .

Characteristics
countries

of

developed

1. AVERAGE INCOME PER CAPITA OF THE

POPULATION IS GENERALLY HIGH.
2. EDUCATION LEVEL OF HIGH AVERAGE
POPULATION.
3. LIFE EXPERIENCE OF THE POPULATION
AVERAGE HEIGHT.
4. POPULATION GROWTH RATE PER YEAR IS
RELATIVELY SMALL.
5. THE DEATH RATE PER YEAR IS
RELATIVELY SMALL POPULATION.
6. LIFE STYLE MARKET ECONOMY.
7. ECONOMIC ACTIVITY IN MOST INDUSTRY
SECTORS, AS WELL AS EXPORT

Developing Countries
A DEVELOPING COUNTRY IS LARGELY SIMILAR ,BUT
THE EXISTING INFRASTRUCTURE IS USUALLY EITHER
OLD OR POORLY MAINTAINED (OR BOTH), AND THE
PEOPLE HAVE LESS MONEY TO SPEND ON STUFF
AND THE QUALITY OF THE PRODUCTS THAT THEY
MAKE OR THE SERVICES THEY PROVIDE IS LOWER
THAN IN A DEVELOPED COUNTRY.
.

Characteristics of developing countries.

THE COUNTRIES WHO ARE GOING THROUGH THE
INITIAL LEVELS OF INDUSTRIAL DEVELOPMENT
ALONG WITH LOW PER CAPITA INCOME ARE KNOWN
AS DEVELOPING COUNTRIES. THEY ARE ALSO
KNOWN AS LOWER DEVELOPED COUNTRIES.
DEVELOPING COUNTRIES ARE ALSO CALLED POOR
COUNTRIES .SOMETIMES THEY ARE OFTEN CALLED
UNDERDEVELOPED ECONOMICS. ACCORDING TO THE UN
CRITERIA, COUNTRIES WITH LESS THAN $844 PER CAPITA
INCOME AS CALLED LESS DEVELOPED ECONOMIES.
THE FOLLOWING ARE THE MAIN CHARACTERISTICS OF
DEVELOPING COUNTRIES:

1. GENERAL POVERTY:
DEVELOPING COUNTRIES ARE POOR .BY DEFINITION, GDP
AND PER CAPITA INCOME ARE AT LOW LEVEL. GENERAL
LIVING STANDARD OF PEOPLE IN THESE COUNTRIES IS

2. HIGH DEPENDENCE ON AGRICULTURE

AGRICULTURE IS THE MAIN OCCUPATION IN DEVELOPING
COUNTRIES. MORE THAN 70 PERCENT OF ACTIVE LABOUR
IS ENGAGED IN THIS PRIMARY SECTOR. POPULATION
INCREASES AND THE INCREASED LABOUR STICK TO
AGRICULTURE THEREBY OVER BURDENING THE FIRM SIZE.
THERE IS LOW OUTPUT PER HEAD.

3. DUALISTIC ECONOMY:
ALL THE SECTORS OF ECONOMY HAVE NOT BEEN
DEVELOPED IN DEVELOPING COUNTRIES. EMPLOYMENT
OPPORTUNITIES OR ACTIVITIES EXITS IN URBAN AREAS
WHEREAS TRADITIONAL PRODUCTION METHOD IS USED IN
RURAL AREAS. EMPLOYMENT OPPORTUNITIES ARE LESS.
HENCE, THESE COUNTRIES HAVE DUALISTIC ECONOMY
WHICH RESULTS IN VARIOUS PROBLEMS WITH
FORMULATING ECONOMIC POLICIES.

4. SOCIAL DUALISM
SOME, HOWEVER, REGARD THE ECONOMIC DUALISM
(TRADITIONAL & MODERN) AS AN INSUFFICIENT
REPRESENTATION OF THE REALITY. THE ONE IS
TRADITIONAL SOCIETY, OR PRE-CAPITALISTIC
SOCIETY WITH HUMAN RELATIONS, MORES AND
MODES VERY MUCH FEUDALISTIC IN THEIR
CONTENTS. THIS IS IN CONTRAST TO MODERN
CAPITALISTIC SOCIETY WITH NEW RELATIONS, NEW
WORK ETHOS AND NEW MORALITY OF THE MARKET
WHERE EVERY THING HAS A MONEY VALUE.

5. UNDERUTILISED NATURAL
RESOURCES:
MOST OF THE DEVELOPING COUNTRIES ARE RICH IN
NATURAL RESOURCES. HOWEVER, THEIR
EXPLORATION AND EXPLOITATION IS LIMITED.

6. Lack of industries and enterprises :

INDUSTRIAL GROWTH IS VERY SLOWLY STAGE OF
DEVELOPMENT ITS CONTRIBUTION TO GDP IS LESS.

VICIOUS CYCLE OF POVERTY

DEVELOPING COUNTRIES ARE POOR. THEY HAVE
LOW PER CAPITA INCOME. LOW INCOME MEANS LESS
SAVING, THAT IS LESS CAPITAL AND LESS
INVESTMENT LEADS TO LESS PRODUCTION THAT
MEANS LOW INCOME. THE VICIOUS CIRCLE OF
POVERTY IS COMPLETE. IT PROVES THAT A POOR
COUNTRY IS POOR BECAUSE IT IS POOR. IT IS
BETTER UNDERSTOOD FROM THE FOLLOWING
RELATION.
LOW INVESTMENT- LOW PRODUCTION- LOW
CAPITAL-LOW INVESTMENT-LOW PRODUCTION-LOW
INCOME.

UNDER DEVELOPED
UNDERDEVELOPMENT IS WHEN RESOURCES ARE NOT
USED TO THEIR FULL SOCIO-ECONOMIC POTENTIAL, WITH
THE RESULT THAT LOCAL OR REGIONAL DEVELOPMENT IS
SLOWER IN MOST CASES THAN IT SHOULD BE .FURTHER
MORE, IT RESULTS FROM THE COMPLEX INTERPLAY OF
INTERNAL AND EXTERNAL FACTORS THAT ALLOW LESS
DEVELOPED COUNTRIES ONLY A LOP-SIDED DEVELOPMENT
PROGRESSION.
AN UNDERDEVELOPED COUNTRY HAS LOTS OF PEOPLE,
BUT LACKS SOME OR ALL OF ITS CITIZENS, AND SO THE
PEOPLE HAVE NO STUFF AND MUST MAKE MONEY WHICH
THEY ARE THEN EXPECTED TO GIVE TO THEIR
GOVERNMENT, WHO WILL THEN GIVE THEM STUFF. THIS
DOES NOT OFTEN HAPPEN, HOWEVER, BECAUSE
GOVERNMENTS IN THESE KINDS OF COUNTRIES ARE
INVARIABLY SO CORRUPT THAT CALLING THEM
GOVERNMENTS AT ALL IS RIDICULOUS.

 1. Poverty :In the less developed countries the standard of living is very
poor. Basic needs like food, clothing, housing, education and
medical facilities are not available. People are leading
miserable life.
2. Dependence on Agriculture :Most of the less developed countries like India and Pakistan
depend upon agriculture sector. The majority of population is
engaged in agriculture. But unfortunately agriculture is
hopelessly in a backward stage in the developing countries, the
average land holding and per acre yield is low.

3. Shortage of Natural Resources :There is a shortage of natural resources like land,

forests, rivers, and minerals in the poor countries, on
the other hand, these are not utilized properly to
achieve prosperity. So national product remains very
low in these countries.
4. Population Pressure :In the under developed countries the size of
population is greater than the size of natural
resources. The rate of population growth is very high
while the rate of economic development is very low.
So high birth rate is the main obstacle in the way of
economic development

5. Lack of Capital :It is the main cause of poverty in the under developed
countries. These countries can not establish the
industries and can not utilize their resources due to
the non availability of capital.
6. Unemployment :In the less developed countries rate of unemployment
is very high. Disguised unemployment is also found in
these countries. It is an obstacle in the way of
economic development and in India and Pakistan it is
increasing with urbanization and spread of education.

7. Lack of Technology :In the developing countries like India and Pakistan
there is a use of low level technology in various
sectors. So the cost of production is very high and
rate of production is very low.
8. Unequal Distribution of Wealth :It is an important feature of under developed
economy. In these countries society is divided into
two classes rich and poor. The rich class enjoys all
the facilities of life while poor class suffers poverty
and hunger.

9. Political Instability :In the under developed countries political condition

is also not favorable. For example in Pakistan the
rate of development remained low due to political
crises. Uncertain conditions creates many problems
for the investors.
10. Deficit Balance of Payment :The less developed countries are producing and
exporting the primary commodities while these are
importing the finished and capital goods. In the
international market the prices of raw material are
very low while the prices of capital goods are high.
So balance of payment remains unfavorable , due to
this reason.

11. Limited Home Market :In the less developed countries like Pakistan, the
purchasing power of the people is low. Producer
is unable to increase the supply of various goods
due to low demand. So limited market is also an
obstacle in the way of economic development.
12. Burden of Debt :It is an important characteristic of the under
developed countries. All these countries receive
foreign aid of their development program. For
example Pakistan spends a huge amount of
foreign exchange for the repayment of debt
interest every year. It is an obstacle in the way of
economic development.

13. International Forces :The rate of economic growth in the third world has
also been adversely affected by the advanced
countries economic policies. The advanced
countries are not ready to transfer technology in
these countries.
14. Inflation :The rate of inflation is high in all the less developing
countries which affects the economic performance.
In these countries level of prices is rising which is
creating the problems for producer and consumer.

15. Imperfection of Market :In the under developed countries prices of

commodities vary from shop to shop and place to
place. Labour and capital are less mobile in search
of higher returns. So imperfection of market is an
obstacle in the way of development.
16. Poor Performance of Industrial Sector :In the under developed countries there is hold of few
families on the industrial sector. The small scale
industry has also been ignored. There is also a
shortage of entrepreneur.

17. Low Per Capita Income :In the under developed countries the size of
national income is low but the size of population is
very high. So per capita income remains low
which is the main obstacle in the way of economic
development.
18. Vicious Circle of Poverty :A poor country is trapped in its own poverty. In the
less developed countries production, per capita
income, saving and investment is low. So low
investment leads to low production.

19. Frequent Changes in Fiscal Policy :The frequent changes are made many times in the
same year in these countries which affect the rate
of investment adversely.
20. Unproductive Expenditure :In the under developed countries a huge capital is
used for unproductive purpose which increases the
rate of inflation and affects the rate of economic
development, adversely.