Introduction:
The total major countries of the world are 182 out
of which only 34 are developed and remaining 148 are under developed.
Developing Country (DC) is a nation which, compare to developed nations, lacks
industrialization, infrastructure, developed agriculture developed natural
resources, and suffers from a low per capita income as a result. Developing
countries and developed countries are differentiating on the bases of
self-esteem, freedom of choice and influence of externals. A country where
the average income of the people is much lower than that of developed
countries, the economy depends upon a few export crops and where farming is
conducted by primary methods is called developing country. Rapid population
growth is causing the shortage of food in many developing countries.
Developing
Country:
Developing countries are also called
under-developed nations (UDN) or the South. Most of them are in Africa, Asia
and Latin America.
According to Prof. R. Nurkse:
“Under
developed countries are those which when compared with the advanced countries,
are under-equipped with capital in relation to their population and natural
resources.”
Developed
Country:
A group of
industrialized nations including
Australia, Austria, Canada, France, Germany, Italy, Japan, the UK and the United
States. In some contexts such countries are
collectively called the North.
"A
developed country is one that allows all its citizens to enjoy a free and
healthy life in a safe environment."
Definitions
of Developing Nations:
·
According
to United Nations Experts:
“A
developing country is that in which per capita income is low when compared to
the per capita incomes of U.S.A., Canada, Australia and Western Europe.”
·
According
to Prof. R. Nurkse:
“Under
developed countries are those which when compared with the advanced countries,
are under-equipped with capital in relation to their population and natural
resources.”
·
According
to Michal P. Tadaro:
“The
under developed country, is that which has low levels of living (absolute
poverty, poor health, poor education and other social services), low self
esteem (low respect, honour, dignity) and limited freedom (freedom from
external influence and dominance, freedom of choice etc.).”
Criteria
to an Under-developed Nation:
Ø Potential to
become economically developed.
Ø Low or no
rising trend of per capita income.
Ø Countries very
poor in resources.
Prof.
Harvey Leibenstein, in his “Economic Backwardness and
Economic Growth” divides these characteristics into four categories:
A. ECONOMIC CHARACTERISTICS
Following are the economic characteristics of
UDC’s:
1-
General Poverty and Low Living Standard
Poverty cannot be described, it can only be felt.
The most of the less developed countries (LDC) are facing the major problem of
general as well as absolute poverty and low standard of living. Most of the
people in developing nations are ill-fed, ill-housed, ill-clothed and
ill-literate. In LDCs almost 1/3 population is much poor. But in Pakistan, 21.0
% population is living below poverty.
2-
Burden of Internal and External Debts
Under developed countries (UDC) are loans and grants receiving nations. Most of
the developing countries of the world are depending on foreign economic loans.
An amount of foreign loans is increasing as the years pass. Their foreign trade
and political structure is also dependent on the guidance of foreigners. The
outstanding total public debts are Rs. 10020 billion (55.5 % of GDP) and the
value of external debts and liabilities is $ 59.5 billion and its services
charges are $ 7.8 billion in 2010-11 in Pakistan.
3-
Low Per Capita Income
Due
to low national income and huge population growth rate, per capita income in
developing countries is very low. At constant prices (Base Year 1959-60) per
capita income of Pakistan was Rs. 985 and according to the Economic Survey of
Pakistan 2010-11 per capita income of Pakistan is $ 1254.
4-
Over Dependence on Agriculture
61% Population of Pakistan is living in more than 50,000 villages. Backward
agriculture is the major occupation of the population. Agriculture sector is
backward due to old and traditional methods of cultivation, in-efficient
farmers, lack of credit facilities; un-organized agriculture market etc. 66.7%
population is directly or indirectly depending on agriculture sector in
Pakistan. It contributes to GDP 20.9 % while in advanced nations it is
less than 10 %. It employed 45.0 % of labour force while it is less than 5 % in
developed countries.
5-
Backward Industrial Sector
Backward industrial sector is an additional feature of under developed
countries. Industrial sector of Pakistani economy is backward since
independence. Pakistan got only 34 (3.7 % of total industrial units) industrial
units out of 921 units in sub-continent in 1947. Small and backward industrial
sector is based on low level of capital formation, technology, training and
education and over dependence on agriculture sector. 13.2 % labour force is
attached with industrial sector in Pakistan. Its share to GDP is 25.8 % and to
exports is about 60 %.
6-
Unemployment
An outstanding problem of developing countries is their high rate of
un-employment, under-employment and disguised-unemployment. More than 3.05
million people are unemployed in Pakistan. There is 16 % underemployed and 20 %
disguised unemployed of total labour force. Unemployment rate is 5.6 %; it is
mainly due to high population growth rate, which is 2.1 %.
7-
Low level of Productivity
The productivity level is very low in under developed countries as compared to
developed countries. Low level of productivity is due to economic backwardness
of people, lack of skill, illiteracy and ill-training. Value of annual
productivity of labour is about $ 100 while it is more than $ 2500 in advanced
nations in Pakistan.
8-
Deficit Balance of Payment
Third world countries have to import some finished and capital goods to make
economic development, on the other hand they have no products to export but raw
material. During July-March, its exports were $ 24 billion and imports were $
32.3 billion In case of Pakistan. So, its deficit balance of payment was $ 8.3
billion in 2010-11.
9-
Dualistic Economy
Dualistic economy refers to the existence of advanced & modern sectors with
traditional & backward sectors. Pakistani economy is also a dualistic
economy as other developing countries on the following grounds: Co-existence of
modern and traditional methods of production in urban and rural areas,
Co-existence of wealthy, highly educated class with a large number of
illiterate poor classes and Co-existence of very high living standard with very
low living standard.
10-
Deficiency of Capital
Shortage of capital is another serious problem of poor nations. Lack of capital
leads to low per capita income, less saving and short investment. Domestic
saving is 9.5% of GDP and total investment is 13.4% of GDP in Pakistan. Rate of
capital accumulation is very low as 5%. On the other hand, capital output ratio
(COR) is very high which is not desirable for economic development.
11-
In-appropriate Use of Natural Resources
Mostly there is shortage of natural resources in developing nations and this is
also a cause of their economic backwardness. Natural resources are available in
various poor countries but they remain un-utilized, under-utilized or
mis-utilized due to capital shortage, less efficiency of labour, lack of skill
and knowledge, backward state of technology, improper government actions and
limited home market. Natural resources contribute to the GDP about 1%.
12-
Market Imperfection
Market is imperfect in accordance with market conditions, rules and regulations
in the most of developing nations. There exist monopolies, mis-leading
information, immobility of factors; hoarding and smuggling etc. that cause the
market to remain imperfect.
13-
Limited Foreign Trade
Due to backwardness, developing countries have to export raw material because
the quality of their products is not according to international standard ISO
etc. Lower developing nations have to import finished and capital goods.
Imports of Pakistan are $ 32.3 billion and exports are $ 24 billion that cause
into unfavourable balance of payment.
14-
Vicious Circle of Poverty
According
to vicious circle of poverty, less developed nations are trapped by their own
poverty. Vicious circle of poverty is also applied in case of Pakistani
economy. Due to poverty, national income of Pakistan is low which causes low
saving and low investment. So, rate of capital formation is very low results in “a country is poor because she is poor”.
15-
Inflation
High
rate of inflation causes economic backwardness in poor nations. Due to high
level of price, purchasing power, value of money and saving of the consumers
tend to decrease. Rate of inflation (CPI) is 14.1% in 2010-11 in Pakistan.
B. DEMOGRAPHIC
CHARACTERISTICS
Following are the demographic characteristics:
16-
Backward Population Explosion
Another common feature of lower developing nations is population pressure due
to high growth rate and reduction in death rate. Population of the Pakistan is
177.1 million with the rapid growth rate of 2.1 % and death rate 0.73 % in
2010-11. Pakistan is at 6th number in the list of the most
populous nations. Basic needs like food, clothing, housing, education,
sanitations and health facilities are not available for the huge portion of
population in these countries.
17-
Poor Health and Diseases
M. P. Todaro in his “Economic Development” states, “Many people in developing
countries fight a constant battle against malnutrition, diseases and ill
health”. Average life expectancy in Pakistan is 66.04 year against 78
years in developed countries. One Doctor is for 1222 persons and one Nurse is
for 2369 persons, number of hospitals is 972 and one hospital bed is available
for 1701 persons. The total expenditure on health sector is just 0.23 % of the
GDP.
18-
Pollution
There is too much pollution in poor countries. On the one side huge existing
population is not provided basic facilities of life, like sanitation, clean
water, infrastructure etc. but on the other side due to rapid population
growth, industrialization and transportation air, water and earth pollution is
increasing. Industries are causing pollution because of non-installation of
treatment plants. Number of continuous air pollution monitoring stations is
only 7 in Pakistan. Pakistan is at number 29th at the chart of
the most polluted nations and at number 6th in Asian countries.
19-
Brain Drain
An
outflow of the best, brightest and talented student from poor nations to rich
nations is called brain drain. There is less reward for the talent, which
causes an outflow of best brain in the backward countries. Reward is not paid
in accordance with the capability, skill and efficiency in less developed
countries.
20-
Inadequate Infrastructure
Adequate
infrastructure is needed which is not available in poor economies to enhance
the process of economic development. Roads, transport, telecommunications,
sanitation, health and education facilities are not at their best level in
these nations;. Government has reserved an amount of Rs. 133 billion to develop
the infrastructure.
C. CULTURAL AND POLITICAL
CHARACTERISTICS
Following are the cultural and political
characteristics of LDC’s:
21-
High Degree of Illiteracy
Illiteracy rate is very high in poor countries while it is almost zero in rich
countries. There is lack of technical education and training centres, which is
necessary for economic growth and development. Literacy rate in Pakistan is
57.7 % during 2010-11. Expenditure on education sector is just 1.8 % of GDP.
22-
Low Level of Organization
There is absence of developed minded leadership in economic activities in third
world nations. Decision making power of entrepreneur is very low due to
illiteracy, less training and backward techniques. Most of educational
institutions are producing employees rather than employers.
23-
Low Self-esteem
There is less respect, honour and dignity of people in the lower developed
countries. People are honoured due to their powers, relations and castes
instead of capabilities. There is poverty, poor health, poor education and
shortage of other social services. Government and population of poor countries
are under the external influence.
24-
Un-productive Expenditures
Population mostly copies the styles of population of developed nations due to
demonstration action in poor economies. Their consumption activities not only
move around their income but also depend upon the relatives, friends and
locality. They spend more on birth, death, marriages and various other
ceremonies etc. which reduces their savings and investment.
25-
Political Instability
There is political instability in the most of the developing countries. There are
a lot of clashes between government and the opposition that is a cause to
reduction in domestic as well as foreign investment. Political instability
keeps low the level of economic development.
26-
Influence of Feudal Lords
The
poor class is under the influence of feudal lords and tribal heads in lower
developed nations,. The feudal lords want to keep the people backward and do
not appreciate the development of the poor. About 50.8% poor borrow from
landlords and 57.4 % poor are working for feudal lords without wages in
Pakistan.
27-
Unproductive Use of Funds
The
unproductive expenditures are rising day by day in developing countries like
Pakistan due to socio-economic and administrative reasons. During the year
2009-10, Rs. 343 billion were spent for defence. About 75 % of the budget is
spent on defence, administration, repayments of loan and interest charges in
Pakistan.
28-
Govt. Control by Wealthy Persons
Wealthy
persons, landlords and elite class not only control the government but also
they have full control over all the major sectors of the economy in poor
countries. This rich class is not interested to solve the problems of the poor
for their welfare but they make government policies for their own improvement.
29-
Frequent Changes in Fiscal Policy
Revenues
and expenditures policy of government is not stable in developing countries.
Government has to change the fiscal policy according to the will of its own
people. Industrialists are the main controller of the government and they
adjust the fiscal policy in accordance with their own benefits.
30-
Violation of Law and Order
Law and order conditions are at their poor stage in
Pakistan like other developing countries. A huge portion of saving of people is
wasted in costly and lengthy legal process. As in case of Iftikhar Muhammad
Chohdery (CJP), he himself has to wait for justices for a long period.
D. TECHNOLOGICAL AND
MISCELLANEOUS CHARACTERISTICS
Following are the technological and miscellaneous characteristics
of developing countries:
31-
Backward State of Technology
Use
of modern techniques of production is not adopted in developing countries. It
may cause further unemployment. Use of advanced technology is impossible due to
shortage of capital, lack of skill and training, high cost of production and
lack of foreign exchange reserves. Backward state of technology is results in
low production, high cost and wastage of time.
32-
Social Aspects
Under
developed countries have also some factors such as joint family system, caste
system, cultural and religious views, beliefs and values that badly affect
their economic development. 32.17 % population is working population and
remaining 67.83 % population is depending on them in Pakistan.
33-
Un-fair Wealth and Income Distribution
There
are not only regional inequalities in developing countries but also wealth and
income inequalities. There is unfair wealth and income distribution in less
developed nation. 20 % extremely rich population has 50.02 % of national
resources, while 20 % poorest population has just 6.37 % of national resources
in Pakistan. The difference between rich and poor is increasing day by day.
34-
Lack of Experts and Skilled Persons
People
have to move abroad for advanced study due to illiteracy and lack of training
institutes. They adjust them in foreign countries due to low remuneration and
less self-esteem. So, there is scarcity of experts, skilled and trained staff
that causes the poor nation to remain backward.
35-
Dependence on External Resources
The
international trade, political activities and other economic activities are
under the influence of other advanced countries in less developing countries.
Their development plans are financed by the loan giving countries; these plans
are made to serve the interests of foreign countries. So, poor nations are
loans and grants receiving nations.
Conclusion:
We conclude that all above characteristics are unfavourable for the developing
economies. These features are obstacles in way of economic development. All
these features are cause of low rate of capital formation, poverty and creation
of vicious circle of poverty.
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