A Study and Analysis of Concepts and Features of Underdevelopment Economics at 19th Century

Research Paper (postgraduate), 2020

6 Pages, Grade: A



The basic problem of the Indian economy is the problem of economic development, i.e., providing the minimum means of subsistence to its fast increasing population. Those who have been susceptible to the view that the problem may always evade a solution may take solace from the fact that another neighboring country, viz., China, has done it and has accomplished the task tolerably well. It has shown that the underdeveloped world is not doomed for ever to live in destination. Economic development is an accomplished fact; the need is to create the environment in which development becomes a self-generating process. In this research paper, we will ascertain the features of under-development, trace the forces that cause underdevelopment and identify the factors that promote development.

Keywords: Underdevelopment, Poverty, Low per capita real income, population, unemployment

I – Concept of Underdevelopment

Basu, K. (2013). The term ‘underdevelopment’ is a relative concept. It primarily implies a lack of development. Economic development is a continuous process. Indeed It is difficult to find two countries at the same level of development. Economists, for the sake of convenience, have divided the economies of various countries broadly into two categories, Viz., (i) developed economies, and (ii) underdeveloped or developing economies. Developed economies are characterized by higher levels of aggregate output and therefore by higher consumption standards and more savings and invest clothing and comfortable housing besides numerous comforts and luxuries. An underdeveloped economy, on the other hand, is characterized by miserably low standards of living. An underdeveloped economy can be defined in clearer as follows:

An Underdeveloped economy is characterized by high population growth rates, abundant but underutilized natural resources, a slow rate of capital formation, a law standard of living accompanies by continuous and sustained efforts to raise it through a proper utilization of available natural, man power, financial and entrepreneurial resources.

This definition helps to bring at one place the characteristics common to most of the underdeveloped countries. But it should not mean that all these countries which are classified as underdeveloped posses all these characteristics in the same measure. Indeed, there may be instances in which country does not have most of these characteristics and is still classified as an underdeveloped economy. The definition simply serves as a sign-post and is positively not all-comprehensive. Its merit lies only in the fact that it helps us to identify major characteristics of an underdeveloped economy.

II- Features of Underdevelopment

Hosseini, H. (2015). The understanding of the problem of underdevelopment requires a good knowledge of certain characteristics of the underdeveloped economics. The analysis of these characteristics will shed some light on the peculiar economic and social conditions of production, consumption and distribution of income and wealth in these economies.

(i)Low per capita real income

Kuhnen, F. (1986). A low per capita real income is generally regarded as one of the main indicators of underdevelopment. The World Bank has classified the various countries into three broad categories, viz. (a) low-income countries, (b) middle-income countries, and (c) industrials countries . Their population, are and the gross national product per capita is shown in Table 1.1 below :

Table 1.1 : Population, Area and GNP Per Capita

Abbildung in dieser Leseprobe nicht enthalten

World Development Report 1983

Table 1.1 Shows very clearly the difference between the developed countries and the underdeveloped countries. The per capita income, on an average, in an underdeveloped countries. The per capita income, on an average, in an underdeveloped country is hardly 2.5 percent of the comparisons are more informative. It would be seen that while on the one extreme we have United Arab Emirates with the highest per capita income of $24,660 in 1981, on the other extreme figures Bhutan with as low capita income as $80. Most of the underdeveloped countries exhibit this very low ratio of income to population. This is a consequence either (a) of low level of national income, or (b) of a high level of population, or (c) of both. A low level of national income may be the result of low productivity , low saving and investment, backward technology and resources, while the level of population is determined by varied social and economic factors.

(ii) Population

Todaro, M., & Smith, S. (2011) Most of the underdeveloped countries experience a higher population growth rate as compares to the developed countries, as would be seen from Table 1.2

Table 1.2: Average Annual Growth of Population (percent)

Abbildung in dieser Leseprobe nicht enthalten

Source: World Development Report,1983

Where the growth rates of population are not very high in relation to other countries, the size of population may be very high (e.g., in China and India). The underdeveloped countries generally experience high birth rates but advancement of medical science had led to a significant reduction in the death rates. This has resulted in most of the underdeveloped countries passing through the second stage of demographic transition, also known as the stage of ‘Population Explosion’. Two major consequences of the population explosion have been : (a) A significant growth in the number of people who live on the subsistence or ‘poverty line’. The poverty line is defined as the line of minimum calorie intake for bare subsistence. (b) A significant growth in the number and proportion of unemployed people who tend to migrate, chiefly from the countryside to the cities, on search of employment.

(iii) Unemployment, Underemployment, disguised unemployment and low productivity

Yotopoulos, P. A. (1965) A characteristic common to most of the underdeveloped countries is the existence of widespread unemployment. Unemployment is caused by a number of factors like (a) the population pressure, (b) a low level of economic activity, (c) poor growth rates, (d) the choice of capital-intensive technique of production, (e) unrealistic education, (f) rigidity of the wage structure, and (g) lack of investment opportunities. One or more of these causes may be operating simultaneously. Reliable information about size of unemployment in the underdeveloped countries is lacking, but most of the studies undertaken in this respect suggest that the proportion of unemployment in underdeveloped countries may be between 8 per cent and 35 per cent of the total labour force.

Another related phenomenon is that of underdevelopment. The basic features of this situation are : (a) the type of employment is not much related to the qualifications of the employees, (b) wages are above the marginal productivity of labour, and (c) a large number of labour-hours remain unutilized. Again, no statistically accurate measurement the unemployed is available, but it has generally been estimated that the unemployed and the underemployed together in the underdeveloped countries would be about 30 per cent of the total work force.

Disguised unemployment refers to unemployment which is ‘hidden’, i.e., not open for anyone to see. A number of persons who may apparently be employed may not be contributing anything to production, In technical jargon, the disguised unemployed are those who are so numerous, relative to the resources, that the marginal physical productivity of labour over a wide range is zero, of not negative.

This situation obtains exclusively, or predominantly, in the agricultural sector, where family labour and non-wage employment predominate.

Unemployment, Underemployment and disguised unemployment result from the fact that labour in the underdeveloped countries is relatively abundant in relation to capital and the productivity of labour or usually low in most underdeveloped countries in comparison with such productivity in the developed countries. Low productivity in the under-developed and other resources, (b) backward technology, (c) lack of proper education, (d) inferior training and skill, and (e) poor health and nutrition. Unemployment is the major cause of widespread poverty in the underdeveloped countries.

(iv) Poverty

Oshima, H. T. (1990). Poverty is widespread in the underdeveloped countries. The fact that about one-half of the total population of the world subsists on an annual average per capita income of only $270 (1981prices) is in itself quite revealing. But this single macro-variable hides many things. A further deeper probe is more informative. Various studies conducted to determine the level of poverty have shown that a substantial proportion of the population (about 30 per cent) in the underdeveloped countries earns. A level of income which varies between $50 and $75 per annum. This is regarded as the minimum necessary for subsistence in these countries. This figure in itself is staggering and more recent evidence may well suggest that the present situation must have deteriorated further. The growing poverty juxtaposed with the fact the incomes have been growing in the underdeveloped countries suggests that there must be something wrong with the income distribution in these countries.


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A Study and Analysis of Concepts and Features of Underdevelopment Economics at 19th Century
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Underdevelopment, Poverty, Low per capita real income, population, unemployment
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Dr. Jose Prabhu Joseph John (Author), 2020, A Study and Analysis of Concepts and Features of Underdevelopment Economics at 19th Century, Munich, GRIN Verlag, https://www.grin.com/document/962509


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