what is developing economy

The country produces and exports high technology products or high value added goods. The people who are undernourished and malnourished often suffer from sickness cannot be efficient and therefore cannot contribute much to the increase in productivity. All of those challenges will lower the standard of living. © 2020 first two years of college and save thousands off your degree. While we have examples of India, Pakistan and Bangladesh 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. Large inequalities in income distribution prevailing in these economies have made the lives of the people more miserable. Workers are paid high rates of wages. The most important and significant aspect of development economic is the realization that economic development strategies to be applied are not to be found in predefined formulas, but differ according to the political, economic, and social factors affecting any given economy. With the explosive rate of growth of population and labour force and the limited creation of employment opportunities in the modern sectors because of the highly capital-intensive technology, surplus labour has emerged in the agriculture and services. About 60 to 75 per cent of its population depends on agriculture and its allied activities for its livelihood. The term "third-world country" to describe a state is today considered archaic and offensive. In other words, they constitute only potential resources. Some of the common characteristics of a developed economy are low birth rate and higher life expectancy, high level of literacy and a well trained workforce and the export of high value added goods. This should have resulted in a greater volume of savings available for capital formation. On the contrary, in high income, that is, developed countries only 4 per cent of their workforce is employed in agriculture, while 26 per cent of their workforce is employed in industry and 70 per cent in services. In the early 1950s in most of developing countries investment was only 5 per cent to 8 per cent of the national income, whereas in the United States, Canada, and Western Europe, it was generally from 15 per cent to 30 per cent. Death rates are also higher and life-spans are shorter because medical care isn't quite as good as in developed economies, but it doesn't compensate for the high birthrate. - Definition, Theory & Impact, What is Wealth? The situation in other developing countries is no better. The low levels of productivity in the developing economies has been caused by dominance of low-productivity agriculture and informal sectors in their economies, low levels of capital formation – both physical and human (education, health), lack of technological progress, rapid population growth which are in fact the very characteristics of the underdeveloped nature of the developing economies. Fraud and lack of data on funding also compromise the effectiveness of calculating the Gross Domestic Product (GDP) of a country. The World’s Largest Oil Reserves By Country, Top Cotton Producing Countries In The World. Visit the American Government: Help and Review page to learn more. This dualistic character of these economies has been held to be the cause of unemployment and underemployment existing in them. However, its economy is too small for us to call it an ’emerging’ market.’ We use this term for the less accessible and smaller, but still ‘investable,’ developing nations. The discipline aims at establishing strategies that apply to different developing countries depending on their unique social, political, and economic factors. What does economic development mean? All other trademarks and copyrights are the property of their respective owners. The diversity among developing 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. Why did the New England colonies have higher literacy rates than the other American colonies? … The world is divided into two parts- one of the poor and the other of the rich which is continuously becoming richer. Plus, get practice tests, quizzes, and personalized coaching to help you Economic development is needed so that living standards of their people may be raised. In India which is a lower middle income country, under 5-years mortality rate in 2009 was relatively high at 66 as against only 8 per 1000 live births in the United States and United Kingdom. Though globalization has not taken root in all developing economies, it has shown to improve the economies in the ones that it has. Development economics is a branch of economics that deals with the improvement of the economies of developing countries. To quote Amartya Sen, “The valued functioning may vary from elementary ones, such as being adequately nourished and being free from avoidable diseases to very complex activities or personal states such as being able to take part in the life of community and having self-respect”.

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