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Characteristics of
Developing Countries
Blink & Dorton, 2007, p314-320
SECTION 5:
DEVELOPMENT ECONOMICS

COMMON CHARACTERISTICS OF
DEVELOPING COUNTRIES
•The development
economist, Michael P
Todora, produced a list of
the common characteristics
of developing nations:

COMMON CHARACTERISTICS OF
DEVELOPING COUNTRIES
1. Low Standards of Living, characterized by low
incomes, inequality, poor health and inadequate
education
2. Low Levels of Productivity
3. High Rates of Population Growth & Dependency
Burdens
4. High & Rising Levels of Unemployment &
Underemployment
5. Substantial Dependence on Agricultural Production &
Primary Product Exports
6. Prevalence of imperfect markets & limited
information.
7. Dominance, Dependence and Vulnerability in
International Relations.

1. Low Standards 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.

2. Low Levels of Productivity
(output per person)
• 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.

3. High Rates of Population Growth &
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.

Dependency Burdens
• 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
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 Burdens
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 & Rising Levels of
Unemployment & Underemployment
• Developing countries tend to have relatively high
levels of unemployment, typically between 9%
and 16% of the labour force.
• In addition, to the official unemployment
statistics, there are three more groups that need
to be considered:
1. 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.

2. Hidden Unemployed : - those who work
for a few hours a day on the family
farm or in a family business or trade.
3. Underemployed: Those who would like
full-time work but are only able to get
part- time employment, often on an
informal basis

• It is when all the groups previously mentioned
are put together that the full extent of
unemployment in developing countries can be
really understood.
• It is impossible to be accurate, but it would be
fair to say that in many developed countries,
the true rate of unemployment is over 40%.

5. Substantial Dependence on Agricultural
Production & 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 &
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.

6. Prevalence of Imperfect Markets &
Limited Information
• 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 &
vulnerability in International Relations
• In almost all cases, developing countries are
dominated by developed countries because of
the economic and political power of the
developed countries.
• In addition, they are dependent upon them for
many things, such as trade, access to technology,
aid and investment
• It is not really possible for economically small,
developing countries to isolate themselves from
world markets.

7. Dominance, dependence &
vulnerability in International Relations
• Developing countries are vulnerable on the
international stage, and are dominated by,
and often harmed by the decisions of
developed countries over which they have no
control.
• Some would argue that what is needed is for
the developing countries to act as a bloc, to
gain more power in trade negotiations.

DIVERSITY AMONG DEVELOPING
COUNTRIES
• No two developing countries are the same.
• Developing countries display notable diversity in
a number of areas.
1. Resource Endowment
2. Historical Background
3. Geographic & Demographic Factors
4. Ethnic & Religious Breakdown
5. The Structure of Industry
6. Political Structure.

DIVERSITY AMONG DEVELOPING COUNTRIES
• There is a tendency to assume that developing
countries must be poorly endowed with
resources, both physical and human.
• However, this is not necessarily the case.
• While it is common for human resources to be
undernourished and poorly educated and thus
low skilled (low levels of human capital),
endowment in terms of physical resources can
very immensely between developing countries.
• Angola possess oil and diamonds and yet is still
very much a developing country.

• Chad had been a country that lacked physical
resources, but the discovery of oil and
subsequent production since 2003 may make
a large difference to the country.
• Bangladesh, in contrast, is a poorly endowed
with physical resources.
• As a consequence synthetic products have
now replaced, the one major resource they
did have – jute.

• It should be remembered that a lack of
physical resources does not necessarily mean
that a country cannot be successful.
• Japan is not well endowed with physical
resources and Singapore has almost literally
none. However, both countries have created
“economic miracles” in the last 50 years.

• A large proportion of developing countries
were once colonies of the developed
countries.
• However, the extent to which this has affected
these countries varies greatly.
• Much depends upon for how long these
countries were colonized and whether the
independence was given freely or whether it
had to be fought.

• It could be argued that countries gained some
positive outcomes from colonization, such as
Singapore and Hong Kong and some countries
did not, such as Vietnam and Angola.
• Colonized or not, there is no doubt that
whatever developing countries we consider,
there will be marked historical differences that
will set the countries apart from each other
socially, politically and economically.

• Developing countries differ hugely in terms of
geographical size and also in terms of
population size.
• Some developing countries are very large,
such as China, Brazil, and India and
Democratic Republic of the Congo, where
others are very small in terms of land mass,
such as Swaziland, Jamaica and Nauru.

• In terms of population, it is a common mistake
to assume that all developing countries have
large populations.
• Developing countries range from China (1.4
billion) to East Timor an Fiji with less than 1
million people.

4. Ethnic and Religious Breakdown
• Developing countries have a wide range of
ethnic and religious diversity.
• High levels of ethnic and religious diversity
within a country make it more likely that there
will be political unrest and internal conflict.
• This has been evident in Rwanda, Sri Lanka,
Ethiopia and Angola in the last 20 years.
• Examples of countries that more religiously
homogenous would be Morocco and Jamaica.

5. The Structure of Industry
• It is widely assumed that all developing countries
depend upon the production and exporting of
primary products.
• While this may be true of many developing
countries, many are reliant on basic
manufactured products for exports. (eg:
Bangladesh)
• Others such as Cape Verde and Maldives are
actually mainly exporters of services in the form
of tourism.

6. Per Capita Income Levels
• Although it is often assumed that all
developing countries have very low levels of
income per capita, we should be aware that
there are marked differences between per
capita income from developing country to
developing country.
• Venezuela has a high GDP per capita, but it is
still very much a developing country.

7. Political Structures
• Developing countries have very different political
structures from each other.
 Democracies such as Brazil, Indonesia & Mexico
Monarchies such as Brunei and Tobago
Military Rule, such as Myanmar & Pakistan.
Single Party Rule, such as China, Cuba & Syria
 Transitional Political Systems, where a country is
in transition often caused by conflict and civil war
and cannot be classified (eg: Somalia)

7. Political Structures
• Within each structure, there are of course many
substructures.
• Eg: Democracies may be presidential systems,
semi-presidential systems, parliamentary
republics or constitutional monarchies.
• The main point is that with developing countries
being so diverse in their systems or government,
it is very difficult to establish one-size-fits all
solutions to developmental problems.

DIVERSITY AMONG DEVELOPING
COUNTRIES
• To conclude, we can say that while there are
some common characteristics that are held by
developing countries to a some degree, there
are also several significant differences.
• One must be very cautious in making
generalizations that imply that all developing
countries are the same.

EXAMINATION QUESTIONS
Essay Questions
1a. Explain two measures of
economic development
(10 marks)
1b. To what extent could it be
argued that all developing
countries share the same set
of characteristics? (15 marks)

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