An Overall Guide to an Underdeveloped Economy
For any nation across the world, an underdeveloped economy can be a major concern. It reflects the financial capability, status of citizens, their living and health conditions, and similar other things that are closely associated with the economy. This article will be of help to those, who wish to know about this aspect of the economy. When someone refers to this term, it means that they are referring to the per capita income and low level of the standard of living of that particular area/ place.
What is an Underdeveloped Economy?
The economy plays a fundamental role in every nation. There have been several countries including India which have righteously recovered from the image of the underdeveloped country by removing the problem of the underdeveloped economy in the country. Without clearing the concept of an underdeveloped economy, an individual cannot understand the struggle and hardships that occur along with this crisis.
The common characteristics of this form of the economy are low living standard and per capita income, high rate of unemployment, excessive population growth, lack of capital and advanced infrastructure, and lack of education. These are the key features that can separate the economy in two parts which are developed and underdeveloped.
Difference Between Developed and Underdeveloped Economy
The economies that have high per capita income and support a high standard of living is referred to as a developed economy and, on the other hand, economies that have low per capita income resulting in a low standard of living is referred to as an underdeveloped economy.
In such an economy there is a lower rate of poverty incidence, service and industrial sectors are thriving. There are a sufficient amount of resources and technological advancement supporting a high rate of production. Most importantly, there is a minor gap between the poor and the rich.
There is a significant amount of poverty and the primary sector like agriculture is in a leading position. The resources in this form of the economy are not judiciously utilised and there is a high rate of dependency on traditional approaches which results in a low rate of production. Most importantly, there is a significant amount of difference between the rich and the poor. In such an economy, the state or the country fails to meet the necessary standard of living to the major section of a population. This leads to materialistic deprivation, misery, hunger, deterioration of health and overall living standard.
Understanding the Concept of Underdevelopment
While talking about what is an underdeveloped economy, it is first important to understand the concept of underdevelopment. It is a relative concept as it compares the quality of life through the economy that creates the difference between a developed population and underdeveloped population. The concept refers to the sustenance of absolute poverty which refers to the kind of poverty, where people are unable to fulfil their basic needs, like, food, clothing, shelter and similar things as such. There is a constant struggle among people to survive.
Thus the meaning of absolute poverty is equivalent to the meaning of underdeveloped economy. Some of the common characteristics of the underdeveloped economy are like low per capita income, economic inequalities, the slow growth rate of per capita, low-productivity labour and lower level of living, rudimentary techniques of production, low rate of capital formation, lack of resource utilization and similar things as such.
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