The Reasons For Underdevelopment Of Economies



The world today presents a picture of appalling contrasts. Some countries are fabulously rich like Countries of Western Europe, North America and the oil rich economies of Middle East. At the same time, nearly three-fourth of the world population generally from Asia, Africa, Latin America and Eastern Europe can barely afford even their basic needs. Majority of people in these countries live in misery, hunger and poverty. The contrast seems to be all the more when these nations accounting for 70% of world population have only 15% share in the world income. The United States of America alone, with its share of only about six percent of the world population, has at its own command, nearly one-fourth of the world income. Then there are countries like Poland Russia, Hungary which are having 12% of world population which is similar to their contribution in the world income. Such widespread disparities in income and living standards among different countries pose grave threat to world peace.


Countries are classified into developed and underdeveloped according to their economic progress that they have achieved. Nations those have made significant development in diverse fields of economic activities are termed as developed or advanced nations. The countries whose economics have been stagnant from a long time (nearly a decade) and who have week economic base, their agriculture and industries are still in infancy and classified as backward, low-income or underdeveloped countries.

Since in most of the underdeveloped countries, serious efforts are now under-way to lift them out of the depths of centuries – old, poverty and stagnation, these countries are trying and encouraged to be developing countries.

An underdeveloped country is simply one which has a real per capita income that is low in relation to the present day per capita income of nations like Canada, USA, Great Britain. Generally, underdeveloped nation is one of the countries which have huge potential of improvement in income level.

Underdeveloped economy

Main features of underdeveloped economies are:

1. Low per capita income:

It is a clear indication of underdeveloped country, the per capita income and the living standard of people in these countries is very low.

2. Low level of living:

Because of the low per capita income, most of the people in these countries live miserably, even much below the poverty line. The availability of quantity and quality of product is very low and poor. The expenditure pattern in the backward countries is very different as compared to the advanced countries. In underdeveloped countries, 80% of the income is exhausted in the basic necessities. As in advanced countries more than 50% of the income is used to fulfill the luxury of life.

3. Low level of productivity :

The basic cause of low per capita income and sub-standard living in the backward countries is the low productivity of the people. According to estimates made by Colin Clark, the average worker in an American Industry produces many more times than what a worker produces in India. This difference is mainly because of low level of education, less use of machinery, absence of technology and knowledge.


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