Question

“The distinction between developed and underdeveloped countries is an extremely important one. In particular, less developed economies behave, for a variety of reasons in a number of important respects, quite differently from the more developed ones.” What distinguishes these types of economies? In what ways do they behave differently, and how can countries move from one to another? (750 words)

Answer 1

Aanswer :

The country whose per – capita income is high with a high growth rate is known as developed country and the country whose per –capita income and growth are low is known as underdeveloped country.

The less developed economies behave quite differently from the more developed countries due to their economic and social conditions.

We can distinguish these types (developed and underdeveloped) of economies on the basis of following points:

1. Per – capita income: the per capita income of a country is important measure to show the growth and economic condition of a country. If per capita income is high, economic development of a country will also high and if per capita income will be low the economic development will also less. So developed countries have high per –capita income while developing economies have low per capita income.
2. Human development index (HDI): this index shows the educational attainments, health and standard of living of a country. Developed economies have high HDI while developing economies have low HDI   
3. Industrial development: the industrial development is high in developed economies while it is low in developing economics.
4. Human resources: Human resource or labour power of developed countries is well educated, skilled and highly productive and the labour power of underdeveloped countries is less educated and low skilled which leads to low labour productivity.
5. Infrastructure development: developed economies have high infrastructural development while basic infrastructure such as roadways, railways, hospitals, education institutions, dams, bridges etc. are not properly developed in underdeveloped economies.
6. Population growth: population growth is low in developed economies as their birth and death rates are low but underdeveloped economies have high population growth as their birth rate is high. High population growth leads to low per capita income.
7. Poverty: Due to low per – capita income poverty rate is high in developing economies while due to high per – capita income poverty rate is low in developed economies.
8. Modernization and technical development: developed economies are modernized and technically advanced while under developed economies are lacking behind in modernization and technical development.
9. Investment and banking sector: investment and banking sector of developed economies is modernized and well established while under developed economies have poor development in investment and banking sector.
10. Foreign tarde: foreign trade sector of developed economies is well established while underdeveloped economies have poor foreign trade sector and foreign exchange.

The developed and under developed economies behave differently in following ways:

1. They behave differently in use of technologies. Developed economies use capital intensive techniques while developing economies use labour intensive techniques.
2. They have different per- capita consumption and expenditure rates.
3. Foreign investment is done by developed countries in developing countries.
4. The natural resources are highly exploited in developed nations and they are under utilized in under developed nations.
5. Under developed nations generally export raw materials while developed nations export finished goods.           

Countries can move from one to another as follows: We have explained the factors above which show differences between developed and under developed economies. On the basis of them we can conclude that:

1. Under developed economies can move from under developed to developed as follows:

• By improving their HDI
• Increasing per-capita income by providing employment
• Technical development
• Modernization of economy
• Increasing infrastructural development
• By improving human resource through development of skilled and well educated labour power.
• Increasing investment and banking services
• Increasing foreign trade

2. Developed nation can be under developed if :

• Country couldn’t maintain its growth.
• Faces severe depression.
• If development processes decrease.
• Devaluation of currency in international market
• Productivity of economic sectors decreases.

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