1
UNIT 3- General Characteristics and Structure
of Developing Countries
A. Classification of Developing Countries
According to:
1. United Nations (UN)
-44 least developed, 88 developing nations, 13
petroleum-rich members of the Organization of
Petroleum Exporting Countries (OPEC)
-145 countries constitute the Third World
2. Organization for Economic Cooperation and
Development (OECD)
-61 low-income countries (LIC’s), 73 middle-
income countries (MIC’s), 11 newly industrializing
countries (NIC’s), 13 member of OPEC
3. International Bank for Reconstruction and
Development (IBRD)
-also known as “World Bank”
-101 (low-income, middle-income, upper-middle-
income), 24 high-income economies
✔ Low income economies are those with a
GNI per capita of USD 1,025 or less
✔ Lower-middle-income economies are
those with a GNI per capita of USD1026-
4035
✔ Upper-middle-income economies are
those with a GNI per capita of USD 4036-
12475
✔ High-income economies are those with
GNI per capita of USD 12,476 or more
B. Characteristics of Developing Economics
An idea of the characteristics of an
underdeveloped or a developing economy must
have been gathered from the above analysis of
the definitions of an underdeveloped economy.
Various developing countries differ a good deal
from each other but even then there are some
common features which are present in almost all
the developing economies.
We explain below some of the basic and
important characteristics which are common to all
developing economies:
1. Low-Per Capita Income or Poverty:
The first important feature of the
underdeveloped countries is their low per capita
income.
It may however be noted that the extent of
poverty prevailing in the developing countries is
not fully reflected in the per capita income which
is only an average income and also includes the
incomes of the rich also. Large inequalities in
income distribution prevailing in these economies
have made the lives of the people more
miserable. A large bulk of population of these
countries lives below the poverty line.
The recent estimates reveal that about 35
per cent of India population (i.e. about 320 million
people) lives below the poverty line, that is, they
are unable to get even sufficient calories of food
needed for minimum subsistence, not to speak of
minimum clothing and housing facilities. The
situation in other developing countries is no
better.
The poverty in the under-developed
countries is due to stagnation or lack of economic
growth in the past and their technological
backwardness, despite the vast resources
existing there. By utilizing their natural resources
and making progress in technology they can
increase their production and income and break
the vicious circle of poverty operating in them.
It may however be noted that after the
Second World War and with getting political
freedom from colonial rule, in a good number of
the under-developed countries the process of
growth has been started and their gross domestic
product (GDP) and per capita income are
increasing. That is, why they are now called the
developing countries or less developed countries
(LDCs) But it will take a long time before they are
able to catch up with the present-day developed
countries.
2. Excessive Dependence on Agriculture:
An under-developed country is generally
predominantly agricultural. About 60 to 75% of
their population depends on agriculture and its
allied activities for its livelihood. Further, about 30
to 50 percent of national income of these
countries is obtained from agriculture alone.
This excessive dependence on agriculture
is the result of low productivity and backwardness
of their agriculture and lack of modern industrial
growth. In the present-day developed countries,
the modern industrial growth brought about
structural transformation with the proportion of
working population engaged in agriculture falling
drastically and that employed in the modern
industrial and services sectors rising enormously.
This occurred due to the rapid growth of the
modern sector on the one hand and tremendous
rise in productivity in agriculture on the other.
In developing countries today, despite
their modern industrial growth in the last four
decades not much progress has been achieved
towards structural transformation in the
occupational structure of their economies. Due to

the use of highly capital-intensive techniques in
their industries very few employment
opportunities have been created in their industrial
sector.
When increasing population cannot obtain
employment in the modern non-agricultural
occupations, such as industry, transport and other
services, then the people remain on land and
agriculture and do some work which they are able
to get.
This has resulted in excessive
dependence on agriculture. During the last some
decades because of population explosion the
pressure of manpower on land in the developing
countries has increased very much. Many bad
results have followed from this. With the increase
in man-land ratio the land has been divided into
small holdings.
3. Lack of Capital and Low Rate of Capital
Formation:
The insufficient amount of physical and human
capital is so characteristic a feature in all
underveloped economies that they are often
called simply ‘capital-poor’ economies. One
indication of the capital deficiency is the low
amount of capital per head of population.
Not only is the capital stock extremely small, but
the current rate of capital formation is also very
low. In most under-developed countries
investment is only 5% to 8% of the national
income, whereas in the United States, Canada,
and Western Europe, it is generally from 15 per
cent to 30 per cent.
The low level of capital formation in an under-
developed country is due both to the weakness of
the inducement to invest and to the low
propensity and capacity to save. The rate of
saving in developing countries is low primarily
because of the low level of national income.
In such an economy, the low level of per capita
income limits the size of the market demand for
manufacturing output which weakens the
inducement to invest. The low level of investment
also arises as a result of the lack of dynamic
entrepreneurship which was regarded by
Schumpeter as the focal point in the process of
economic development.
At the root of capital deficiency is the shortage of
savings. The level of per capita income being
quite low, most of it is spent on satisfying the bare
necessities of life, leaving a very little margin of
income for capital accumulation.
Even with an increase in the level of individual
incomes in an under-developed economy, there
does not usually follow a higher rate of
accumulation because of the tendency to copy
2
the higher levels of consumption prevailing in the
advanced countries. Nurkse has called this as
“demonstration effect”. It is usually caused
through media like films, television or through
foreign visits.
Generally, there exist large inequalities in the
distribution of incomes in under-developed
countries. This should have resulted in a greater
volume of savings available for capital formation.
But most often the sector in which the greatest
concentration of incomes lies is the one which
derives its income primarily from non-
entrepreneurial sources such as unearned
incomes of rents, interests and monopoly profits.
The attitudes and social values of this sector are
often such that it is prone to use its income for
‘conspicuous consumption’, investment in land
and real estate, speculative transactions,
inventory accumulation and hoarding of gold and
jewelry. If these surpluses are channeled into
productive investment, they would tend to
increase substantially the level of capital
formation.
4. Rapid Population Growth and Disguised
Unemployment:
The diversity among under-developed economies
is perhaps nowhere to be seen so much in
evidence as in respect of the facts of their
population in respect of its size, density and
growth. While we have examples of India and
Pakistan with their teeming millions and galloping
rates of population growth, there are the Latin
American countries which are very sparsely
populated and whose total population in some
cases numbers less than a single metropolitan
city in India and China.
In several newly emerging countries of Africa too
and in some of the Middle Eastern countries the
size of their population cannot be regarded as
excessive, considering their large expanse. The
South-East and Eastern Asia, on the other hand,
have large populations.
However, there appears to be a common
measure, namely, a rapid rate of population
increase. This rate has been rising still more in
recent years, thanks to the advances in medical
sciences which have greatly reduced the death
rate due to epidemics and diseases.
While the death rate has fallen sharply, birth rate
does not yet show any significant decline so that
the natural survival rate has become much larger.
In countries like India, Pakistan, Burma, a
veritable population explosion is feared. The great
threat of this important trend consists in this is
that it sets at bought all attempts at development
inasmuch as the increased output is swallowed
up by the increased population.

One important consequence of this rapid rate of
population growth is that it throws more and more
people on land and into informal sector to eke out
their living from agriculture, since alternative
occupations do not simultaneously develop and
thus are not there to absorb the increasing
numbers seeking gainful employment.
The resultant pressure of population on land and
in informal sector thus gives rise to what has
been called “disguised unemployment”. Disguised
unemployment means that there are more
persons engaged in agriculture than are actually
needed so that the addition of such persons does
not add to agricultural output, or putting it
alternatively, given the technology and
organization even if some of the persons are
withdrawn from land, no fall in production will
follow from such withdrawal. As a result, marginal
productivity of a wide range of labour employed in
agriculture is zero.
Under-utilization of Natural Resources:
The natural resources in an under-developed
economy are either unutilized or underutilized.
Generally speaking, underdeveloped countries
are not deficient in land, water, mineral, forest or
power resources, though they may be untapped.
In other words, they constitute only potential
resources. The main problem in their case is that
such resources have not been fully and properly
utilized due to various difficulties such as
shortage of capital, primitive technology and, the
small size of the market.
Economic Backwardness of the People:
The people in under-developed countries are
economically backward, that is, the quality of the
people as productive agents is low. Instead of
acquiring the greatest possible control over their
physical environment, the people have struck a
balance with nature at an elementary level.
They have been relatively unsuccessful in solving
the economic problem of man’s conquest of his
material environment. Particular manifestations of
this are low labour efficiency, factor immobility,
limited specialization in occupations and in
trades, and a lack of entrepreneurship, illiteracy,
ignorance, and conservative social values that
minimize the incentives for economic change.
5. Dualistic Structure of the Underdeveloped
Economies:
An important feature of developing economies,
especially those which are marked by surplus
labour is that they have a dualistic structure. This
dualistic character of these economies has been
held to be the cause of unemployment and under-
employment existing in them.
3
Keeping in view this dualistic structure of less
developed economies, important models of
income and employment have been propounded.
Famous Lewis model of economic development
with unlimited supplies of labour and Fei-Ranis
model of “Development in a Labour Surplus
Economy” explain how in dualistic economies, the
unemployed and underemployed labour in the
traditional sector is drawn into a modern high
productivity sector.
The concept of dualism was first of all introduced
into the development analysis by Dr. J.H. Boeke
but he emphasized the social dualism, according
to which there is sharp contrast between the
social systems characterizing the two broad
sectors of the economy, one in which the original
social system with its subsistence or pre-capitalist
nature, limited wants, non-economic behavior and
low level of economic and social welfare prevails,
and the other where imported capitalist system
with its modern system of industrial organization,
wage employment, unlimited wants and positive
behavior to economic incentives exists.
However, it is technological dualism rather than
Boeke’s social dualism which has an important
bearing on the problem of economic growth and
surplus labour in the developing countries.
According to the concept of technological
dualism, the important difference between the
traditional and the modern sectors lies in the
difference between the production techniques or
technologies used.
In the small modern sector consisting of large-
scale manufacturing and mining which provides
wage employment, highly capital-intensive
techniques imported from the developed countries
are used. On the other hand, in the large
traditional sector covering agriculture, handicrafts
and allied activities, in which there exist extended
family system and self-employment, labour-
intensive technology is generally used.
As a result of the difference in technologies used,
the labor productivity and levels of earnings in the
modem sector are much higher than those in the
traditional sector. Moreover, since the technology
used in the modern sector is highly capital-
intensive, the growth of this sector has not
absorbed adequate amount of labour in high
productivity and high wage employment.
With the explosive rate of growth of population
and labour force and the limited creation of
employment opportunities in the modem sectors
because of the highly capital-intensive
technology, surplus la-bour has emerged in the
agriculture and services. It has been possible for
agriculture to contain the surplus labour because
of the prevalence of extended family system in
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which both work and income are shared by the There is a growing and legitimate desire of the
family members. poor nations to eradicate poverty. The desire to
develop is keenly felt by different sections of their
We thus see that the problem of unemployment
population. Their desire to develop is natural and
and under-employment in less developed
understandable because they experience acute
economies has been intensified by the
physical sufferings as a result of appallingly
technological dualism caused by the use, in the
miserable economic conditions in which they live.
modem manufacturing and mining, of capital-
The masses in the poor countries constantly face
intensive technology imported from abroad which
hunger, illiteracy, sickness and forced to eke out a
is wholly unsuitable to the factor endowments of
life of extreme poverty.
these less developed economies with abundant
labour and small capital. Note that, according to the new view, economic
development is needed mainly for two reasons:
The unemployment and under-employment in
these less developed economies are not only due (1) The removal of poverty,
to the slow growth of capital or low rate of
(2) Enlargement of human capabilities and
investment, it is also due to the highly capital-
freedoms.
intensive techniques used in the modem sector.
For the removal of poverty capabilities of the poor
This technological dualism with the fact that
should be enhanced so that they should be able
modem sector has limited labour-absorptive
to meet their minimum basic needs which include
capacity contains important implications for
getting adequate food, health, clothing and
development strategy to be framed for less
shelter. To achieve these economic growths is
developed countries like India with surplus labour.
necessary but not sufficient.
6. Need for Development:
Therefore, for removal of poverty, direct anti-
There is a very urgent need for economic poverty measures such as generation of enough
development in the under-developed or poor employment opportunities be taken. Secondly, as
countries. Economic development is needed so emphasized by Amartya Sen, development is
that living standards of their people may be needed so that people should enjoy freedom and
raised. What is more important is that economic life of valued functioning. To quote Amartya Sen,
development of the poor countries is necessary “The valued functioning may vary from
from the point of view of the richer countries. elementary ones, such as being adequately
nourished and being free from avoidable diseases
What do we find today? The world is divided into
to very complex activities or personal states such
two parts: one of the poor and the other rich
as being able to take part in the life of community
which is continuously becoming richer. Such a
and having self respect”. Thus, according to
situation threatens the economic and political
Amartya Sen, freedom of choice, or control of
stability of the world. Unless the poor countries
one’s own life are central aspects of well-being for
are enabled to share the general prosperity, their
which true development is needed.
condition will become more and more difficult.
Times are gone when people believed in their
It is the relative difference between the rich and
destiny or kismet. They are no longer prepared to
poor countries which will make the poor countries
reconcile to their poverty as resulting from fate.
contented or discontented. Ever-increasing
They have now realized that the solution of the
discontent in the poor countries is bound, sooner
problem of poverty lies in economic development.
or later, to aggravate the already explosive
situation in the world. This realization has been further strengthened by
the ever-increasing contacts and communications
As the gulf between the rich and poor countries
between such countries and the developed
widens, the tension in the world will grow. The
countries. The awareness of the possibilities of
poor countries will agitate more and more for a
development is growing every day. Already, the
share in prosperity and, consequently, their
upper sections of society in developing countries
demand on the richer countries will grow louder
are imitating the living standards prevalent in the
and louder in volume and intensity.
rich countries.
There is ample evidence in the world of the fact
The desire for development has followed the
that when nations cannot solve their domestic
political freedom of the many poor countries from
problems, their governments plunge them into
foreign rule. It has now been realized that political
war with their neighbors who may be prosperous.
freedom without economic freedom and
It is thus in the interest of world peace and
prosperity has no meaning.
harmony that the poor countries are enabled to
remove or reduce their poverty. Political independence has naturally raised
expectations of the people in the economic

sphere. No wonder that people of these countries
which have won freedom from the colonial rule
aspire to develop economically and that in the
shortest possible time.
Other Characteristics
1. Low income per head:
People in developing countries are poorer on an
average, than those in developed economies.
However, this does not mean that all the people
are poor. In fact, some can be very rich.
2. Low levels of saving due to low income:
Poor people cannot afford to save and so the
savings ratio (saving as a percentage of
disposable income) of a country, where the
average income is low, is likely to be low.
3. Low life expectancy and high infant
mortality rate:
Someone born in Japan can expect to live up to
the age of 83 whereas someone born in
Zimbabwe has a life expectancy of 37 years only.
4. Low levels of education and health care:
These tend to result in low levels of productivity.
5. Low levels of capital goods and poor
infrastructure:
These again reduce productivity.
6. Poor housing and sanitation:
A significant number of people may not have
access to clean water for drinking and washing.
7. Relatively high number of workers,
employed in the primary sector:
Underemployment can be high in agriculture. For
instance, ten persons may be doing the work of
six. This, again, lowers productivity.
8. Concentration on a narrow range of exports
(most of which are primary products):
Developing countries can be subject to, what is
known as, the
underdevelopment trap or the vicious circle of
poverty- This is the problem, that a country with
low incomes has a low saving rate. This means
that most of their resources are used to produce
consumer goods. The lack of capital goods keeps
productivity and income low, as shown in Fig. 1.
5
9. High levels of international debt:
Many poor countries have borrowed heavily in the
past. In some cases, a large proportion of the
country’s income is taken up for repaying (and
paying interest on) foreign loans. This means it
cannot be used to spend on education, health
care and investment. So, the opportunity cost of
repaying debt may be economic development.
10. Reliance on the export of primary
products:
Over a period of time, the price of primary
products tends to fall, relative to the price of
manufactured goods and services. This means
that some poor countries receive relatively less
for their exports whilst having to pay more for their
imports. Over the last fifty years, a range of
commodity prices, including copper, coffee, cocoa
and coal have been falling.
A number of primary product markets are
dominated by the consuming countries and these
developed countries use their buying power to
keep down the prices of primary products. There
have also been significant fluctuations in the price
of some primary products due to climate changes
and natural resources.
11. Lack of investment in human capital and
capital goods:
Lack of expenditure on education, training and
capital goods holds back- increases in
productivity, introduction of new technology and
international competitiveness.
12. Emigration of key workers:
Doctors, nurses, teachers, managers and other
key workers may seek better paid employment
abroad. Since 1999, for instance, more medical
staff have emigrated from Ghana, than the
country has been able to train. Most of these have
emigrated to Canada, the UK and USA.
13. Trade restrictions on their products:
Tariffs, other restrictions and foreign government
subsidies on their own products, make it difficult
for developing countries to sell their products at
home and abroad, on equal terms.

The steepest tariffs tend to be imposed by
developed economies on those products, which
developing economies concentrate on, including
agricultural produce and labour-intensive
manufactured goods. These tariffs also build up
as the goods are processed into higher value-
added goods, so that developing economies are
discouraged from building up their industries.
14. Unbalanced economies:
Certain markets may be underdeveloped such as
the financial sector. A lack of a developed
financial sector is likely to discourage saving and
investment.
C. The Structure of Third World Economies
Any portrayal of the structural diversity of
developing nations requires an examination of
seven critical
components:
1. The size of the country (geographic area,
population, and income)
2. Its historical and colonial background
3. Its endowments of physical and human
resources
4. The relative importance of its public and private
sectors
5. The nature of its industrial structure
6. Its degree of dependence on external
economic and political forces
7. The distribution of power and the institutional
and political structure within the nation
Let us briefly consider each component, focusing
on some similarities and differences among
countries in Africa, Asia, and Latin America.
1. 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. As
we shall see in Chapter 5, there is no necessary
6
relationship between a country's size, its level of
per capita national income, and the degree of
equality or inequality in its distribution of that
income.
Even excluding the wealthy OPEC states, India,
with a 1993 population of over 900 million, had a
1990 per capita income level of $350, while
nearby Singapore, with fewer than 3 million
people, had a 1990 per capita income of over
$12,300.
2. 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
in these immediate political issues.
Perhaps more important, the European colonial
powers had a dramatic and long-lasting impact on
the economies and political and institutional
structures of their African and Asian colonies by
their introduction of three powerful and tradition-
shattering ideas: private property, personal
taxation, and the requirement that taxes be paid
in money rather than in kind. As we will discover
later, these ideas combined to erode the
autonomy of local communities and to expose
their people to many new forms of potential
exploitation.
In Latin America, a longer history of political
independence plus a more shared colonial
heritage (Spanish and Portuguese) has meant
that in spite of geographic and demographic
diversity, the countries possess relatively similar
economic, social, and cultural institutions and
face similar problems. In Asia, different colonial
heritages and the diverse cultural traditions of the
indigenous peoples have combined to create
different institutional and social patterns in
countries such as India (British), the Philippines
(Spanish and American), Vietnam (French), and
Indonesia (Dutch).
3. 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.
Moreover, the level of administrative skills will
often determine the ability of the public sector to
alter the structure of production and the time it
takes for such structural alteration to occur. This
involves the whole complex of interrelationships
between culture, of tradition, religion, and ethnic
and tribal fragmentation or cohesion. Thus, the
nature and character of a country's human
resources are important determinants of its
economic structure (see Chapter II), and these
clearly differ from one region to the next.
4. 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. Often countries like
those in Africa with severe shortages of skilled
human resources have tended to put greater
emphasis on public-sector activities and state-run
enterprises on the assumption that limited skilled
manpower can be best used by coordinating
rather than fragmenting administrative and
entrepreneurial activities.
The widespread economic failures and financial
difficulties of many of these public concerns in
countries such as Ghana, Senegal, Kenya, and
Tanzania raise questions, however, about the
validity of this assumption. As a result, these and
other African nations have moved in recent years
toward less public and more private enterprise.
Economic policies, such as those designed to
promote more employment, will naturally be
7
different for countries with large public sectors
and ones with sizable private sectors. In
economies dominated by the public sector, direct
government investment projects and large rural
works programs will take precedence, whereas in
private- oriented economies, special tax
allowances designed to induce private businesses
to employ more workers might be more common.
Although the problem of widespread
unemployment may be
similar, the solution can differ in countries with
significant differences in the relative importance of
the public and private sectors.
5. 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. Farming is not merely an
occupation but a way of life for most people in
Asia, Africa, and Latin America. 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
Latin America in terms of patterns of land
ownership, but the similarities are lessened by
substantial cultural differences.
It is in the relative importance of both the
manufacturing and service sectors that we find
the widest variation among developing nations.
Most Latin American countries, having a longer
history of independence and, in general, higher
levels of national income than African or Asian
nations, possess more advanced industrial
sectors. But in the 1970s and 1980s, countries
like Taiwan, South Korea, Hong Kong, and
Singapore greatly accelerated the growth of their
manufacturing output and are rapidly becoming
industrialized states. In terms of sheer size, India
has one of the largest manufacturing sectors in
the Third World, but this sector is nevertheless
small in relation to the nation's enormous rural
population. Table 2.2 provides information on the
distribution of labor force and gross domestic
product (GDP) between agriculture and industry
in 17 developing countries, the United States, and
the United Kingdom. The contrasts among the
industrial structures of these countries is striking,
especially in terms of the relative importance of
agriculture.
In spite of common problems, therefore. Third
World development strategies may vary from one
country to the
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next, depending on the nature, structure, and East; or the landlords, moneylenders, and wealthy
degree of interdependence among its primary, industrialists of Asia—most developing countries
secondary, and tertiary industrial sectors. The are ruled directly or indirectly by small and
primary sector consists of agriculture, forestry, powerful elites to a greater extent than the
and fishing; the secondary, mostly of developed nations are.
manufacturing; and the tertiary, of commerce,
Effective social and economic change thus
finance, transport, and services.
requires either that the support of elite groups be
6. External Dependence: Economic, enlisted through persuasion or coercion or that
Political, and Cultural the elites be pushed aside by more powerful
forces. Either way, and this point will be repeated
The degree to which a country is dependent on
often throughout this book, economic and social
foreign economic, social, and political forces is
development will often be impossible without
related to its size, resource endowment, and
corresponding changes in the social, political, and
political history. For most Third World countries,
economic institutions of a nation (e.g., land tenure
this dependence is substantial. In some cases, it
systems, forms of governance, educational
touches almost every facet of life. Most small
structures, labor market relationships, property
nations are highly dependent on foreign trade
rights, the distribution and control of physical and
with the developed world. Almost all small nations
financial assets, laws of taxation and inheritance,
are dependent on the importation of foreign and
and provision of credit).
often inappropriate technologies of production.
This fact alone exerts an extraordinary influence
on the character of the growth process in these
Video Clips:
dependent nations.
1. Characteristics of Developing Countries
But even beyond the strictly economic
https://www.youtube.com/watch?
manifestations of dependence in the form of the
v=MauZwxPEF88
international transfer of goods and technologies is
2. Structural features of developed and
the international transmission of institutions (most
underdeveloped countries
notably systems of education and governance),
https://www.youtube.com/watch?
values, patterns of consumption, and attitudes
v=gDtuK9lMfsk
toward life, work, and self. Later chapters show
3. Why Some Countries Are Poor and Others
that this transmission phenomenon brings mixed
Rich https://www.youtube.com/watch?
blessings to most LDCs, especially to those with
v=tEe_QTNPffU
the greatest potential for self-reliance. A country's
4. Third World vs First World Countries -
ability to chart its own economic and social
What's The Difference?
destiny is significantly affected by its degree of
https://www.youtube.com/watch?
dependence on these and other external forces.
v=1yKvwOydZFw
7. Political Structure, Power, and Interest
Groups
In the final analysis, it is often not the correctness
of economic policies alone that determines the
outcome of national approaches to critical
development problems. 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.
Nevertheless—whatever the specific distribution
of power among the military, the industrialists,
and the large landowners of Latin America; the
politicians and high-level civil servants in Africa;
the oil sheiks and financial moguls of the Middle