Characteristics of Underdevelopment

Business studies study module

This refers to a situation wherethe economic growth is in the negative direction (decreasing) accompanied uneven distribution of wealth and decrease in quality and quantity of the factors of production available

  • High level of poverty. This is characterized most of the people in the country depending on mainly subsistence, or lives below the poverty levels. Their per capita income is lower as compared to the developed countries
  • High disparity in income distribution. The income in this countries are not evenly distributed with the few rich people earning so much while the poor majority earns so little
  • Low levels of savings and investments. They have very little if at all exist to save and invest for their further development, making them to continue being poor. This is well illustrated in the vicious circle of poverty
  • High population growth rates. This is due to some of them not being able to afford, ignorant about or simply refusing to use the modern birth control methods since they find consolation on their high number of children
  • Dominance of subsistence sector. This is due to their inability to raise capital for indirect production
  • Problem of unemployment. The high population growth rate leads to high supply of labour that the country’s economy cannot afford to absorb all, leading to unemployment
  • Under utilization of natural resources. This may be due to lack of capital in this countries or in appropriate technology they use
  • Dependence on the developed countries. This is due to their in ability to sustain themselves financially, which makes them keep on calling upon the developed partners for financial assistance
  • Poor infrastructure. Their roads and communication networks are not properly maintained due to the in availability of adequate resources to improve them



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