Characteristics of Developing Countries

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CHARACTERISTICS OF DEVELOPING COUNTRIES

Low standard of living
• Low Standards of living tend to be experienced by the majority of the population. • The main indicators of these low living standards are high poverty levels (i.e very low incomes), high levels of inequality, very poor housing, low standards of health, high infant mortality rates, high levels of malnutrition and a lack of education.

Low levels of productivity
• The main causes are low education standards within the countries, the low level of health among workers, lack of investment in physical capital and lack of access to technology.

High rates of population growth and dependency burdens
• Developing countries tend to have crude birth rates that are on average more than double the rates in developed countries. • The crude birth rate is annual number of live births per 1,000 of the population. • The world average in 2005, was 20.15, but in some developing countries, it can be as high as 50 per thousand. • The high crude birth rates in developing countries tend to be transformed into high dependency ratios. • The high crude birth rate means that there are a lot of young people under the age of 15 in developing countries. • Those of working age, usually assumed to be 15 to 64, have to support a much larger proportion of children than does the work force in developing countries.

Dependency ratio
• The dependency ratio is the percentage of those who are non-productive, usually those who are under 15 and over 64, expressed as a percentage of those of working age, usually 15 to 64. • The equation would be:

Dependency Ratio =
(% of population under 15) + (% of population over 64)
(% of population 15 to 64)

4. High and rising levels of unemployment and underemployment • Developing countries tend to have relatively high levels of unemployment, typically between 9% and 16% of the labor force. • In addition, to the official unemployment statistics, there are three more groups that need to be considered: a). Hard Core

Those that have been unemployed for so long that they have given up searching for a job and no longer appear as unemployed. b) Hidden Unemployed
Those who work for a few hours a day on the family farm or in a family business or trade

c) Underemployed
Those who would like full-time work but are only able to get part-time employment, often on an informal basis

5. Substantial Dependence on agricultural production and primary product exports • The problem of over-dependence on agricultural commodities was examined in the context of the Terms of Trade.

6. Prevalence of imperfect markets and limited information
• The trend in developing countries in the last 20 years has been towards a more market-oriented approach to growth. • This has sometimes been promoted or encouraged by international bodies such as the IMF and the World Bank. • However, this is possibly problematic, since while market-based approaches may work well in economies that are efficiently functioning, many developing countries face imperfect markets and imperfect knowledge. • Developing countries may lack many of the necessary factors that enable markets to work efficiently. • They may lack a functioning banking system, which enables and encourages savings and then investment. • They lack a developed legal system, which ensures that business takes place in a fair and structured manner. • They lack adequate infrastructure, especially in terms of transport routes of all types, which would enable raw materials, semi-finished products and final goods to more around the country, and to be moved out of the country , efficiently and at low cost. • They lack accurate information systems for both producers and consumers, which often leads to imperfect information, the misallocation of resources and misinformed purchasing decisions.

7. Dominance, dependence and vulnerability in...
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