ILE-IFE, NIGERIA.

­ Website:
www.oauife.ng/pgcollege
E-mail:
[email protected]

Course Title: Issues in

Development Economics
Course Code:ECN 306
Dr Monica A. Orisadare
Department of Economics
OAU, IlE-Ife
 Module 4
Common features and Variations of
underdeveloped countries
Objectives
• Identify common features of underdeveloped
countries

• Explain common features of underdeveloped

countries

• Identify variations of underdeveloped countries

• Explain variations of underdeveloped countries

Common Features of Underdeveloped
Countries
• Under developed economies means those
countries in which per capita real income is
low as compared to US, UK, Australia, Canada,
France, Norway and Japan or we can say any
other developed economies.

• Hence under developed economies can be

considered as synonym of poor countries.
Common Features of Underdeveloped
Countries Cont’
Third World nations share a common set of problems, both domestic and
international— problems that in fact define their state of
underdevelopment.

The following are the features of an under developed nature of economies.

• Low per capita income

• Low levels of Living

• Unequal income distribution

• Low rate of capital formation

• Low levels of productivity

• Population
 Common Features of Underdeveloped Countries
Cont’
• Unemployment

• Predominance of agricultural sector

• Backward infrastructure

• Dominance of farm sector in foreign trade

• Poor quality of human capital

• Slow pace of industrial growth

•Variations
It is ofhazardous
Underdeveloped to try to generalize too much about the 145
Countries

member countries of the United Nations (U.N.) that constitute

the Third World.

• While almost all are poor in money terms, they are diverse in
culture, economic conditions, and social and political structures.

• Thus, for example, low-income countries include India, with

over 900 million people and 17 states, as well as Grenada, with
less than 100,000 people, fewer than most large towns in the
United States.

• Large size entails complex problems of national cohesion and

administration while offering the benefits of relatively large
markets, a wide range of resources, and the potential for self-
sufficiency and economic diversity.
Variations of Underdeveloped Countries
• In contrast, for many small countries the
situation is reversed, with problems including
limited markets, shortages of skills, scarce
physical resources, weak bargaining power,
and little prospect of significant economic self-
reliance
Variations of Underdeveloped Countries
Any portrayal of the structural diversity of developing nations requires
an examination of seven critical components:
• The size of the country (geographic area, population, and income)

• Its historical and colonial background

• Its endowments of physical and human resources

• The relative importance of its public and private sectors

• The nature of its industrial structure

• Its degree of dependence on external economic and political forces

• The distribution of power and the institutional and political structure

within the nation
Size and Income Level
• Size and Income Level Obviously, the sheer physical size of a country,
the size of its population, and its level of national income per capita
are important determinants of its economic potential and major
factors differentiating one Third World nation from another.

• Of the 145 developing countries that are full members of the United
Nations, 90 have fewer than 15 million people, 83 fewer than 5
million.

• Large and populated nations like Brazil, India, Egypt, and Nigeria
exist side by side with small countries like Paraguay, Nepal, Jordan,
and Chad.

• Large size usually presents advantages of diverse resource

endowment, large potential markets, and a lesser dependence on
foreign sources of materials and products. But it also creates
problems of administrative control, national cohesion, and regional
imbalances.
Historical Background
• Historical Background Most African and Asian nations were at one
time or another colonies of Western European countries,
primarily Britain and France but also Belgium, the Netherlands,
Germany, Portugal, and Spain.

• The economic structures of these nations, as well as their

educational and social institutions, have typically been modeled
on those of their former colonial rulers.

• Countries like those in Africa that only recently gained their

independence are therefore likely to be more concerned with
consolidating and evolving their own national economic and
political structures than with simply promoting rapid economic
development.

• Their policies (e.g., the rapid Africanization of former colonial-

held civil service jobs) may consequently reflect a greater interest
Physical and Human Resources
• A country's potential for economic growth is greatly
influenced by its endowments of physical resources (its land,
minerals, and other raw materials) and human resources
(both numbers of people and their level of skills).

• The extreme case of favorable physical resource endowment

is the Persian Gulf oil states.

• At the other extreme are countries like Chad, Yemen, Haiti,

and Bangladesh, where endowments of raw materials and
minerals and even fertile land are relatively minimal.

• In the realm of human resource endowments, not only are

sheer numbers of people and their skill levels important, but
so also are their cultural outlooks, attitudes toward work,
and desire for self-improvement.
Relative Importance of the Public and Private Sectors

• Most Third World countries have mixed economic systems,

featuring both public and private ownership and use of resources.

• The division between the two and their relative importance are
mostly a function of historical and political circumstances.

• Thus, in general, Latin American and Southeast Asian nations have

larger private sectors than South Asian and African nations.

• The degree of foreign ownership in the private sector is another

important variable to consider when differentiating among LDCs.

• A large foreign-owned private sector usually creates economic and

political opportunities as well as problems not found in countries
where foreign investors are less prevalent.
Industrial Structure
• The vast majority of developing countries are agrarian in
economic, social, and cultural outlook.

• Agriculture, both subsistence and commercial, is the

principal economic activity in terms of the occupational
distribution of the labor force, if not in terms of
proportionate contributions to the gross national product.

• Nevertheless, there are great differences between the

structure of agrarian systems and patterns of land
ownership in Latin America and Africa.

• Asian agrarian systems are somewhat closer to those of

Latin America in terms of patterns of land ownership, but
the similarities are lessened by substantial cultural
• Third World development strategies may vary
from one country to the next, depending on
the nature, structure, and degree of
interdependence among its primary,
secondary, and tertiary industrial sectors.

• The primary sector consists of agriculture,

forestry, and fishing; the secondary, mostly of
manufacturing; and the tertiary, of commerce,
finance, transport, and services.
External Dependence
Economic, Political, and Cultural The degree to
which a country is dependent on foreign
economic, social, and political forces is related
to its size, resource endowment, and political
history.

For most Third World countries, this dependence

is substantial. In some cases, it touches almost
every facet of life. Most small nations are
highly dependent on foreign trade with the
developed world
Political Structure, Power, and Interest Groups
The political structure and the vested interests and
allegiances of ruling elites (e.g., large
landowners, urban industrialists, bankers, foreign
manufacturers, the military, trade unionists) will
typically determine what strategies are possible
and where the main roadblocks to effective
economic and social change may lie.

The constellation of interests and power among

different segments of the populations of most
developing countries is itself the result of their
economic, social, and political histories and is
likely to differ from one country to the next.
Assignment
• Mention three diversity in the characteristics
of underdeveloped countries

• State five common features of developing

countries

• What are some common characteristics of

Nigeria that may make the country have
advantage over other African countries?
Recap
• Common features of underdeveloped
countries

• Identification of variations of underdeveloped

countries
• Thank You