Assignment

On
Problem of Underdeveloped Country
Submitted to:
Syka Parvin
Lecturer
Southeast Business School
Southeast University

Submitted by.

Name ID Bache
Most. Fahmida 2018010000118 48th
Jobydul Islam 2018010000044 48th
Jahanara Akter 2017010000238 46th
S.M. Hasubur 2018010000055 48th
Rahmn
Sumaiya Afrin 2017010000068 46th
Introduction:
The problems of underdeveloped countries include inaccessibility of the region, shortage of
capital, lack of proper attention, primitive technology, transport bottlenecks, and the small
extent of the market. Thus, by utilizing its natural resources, underdeveloped countries can
develop their economies with the minimum initiative of their own. This definition of
underdevelopment is quite satisfactory. A group of experts of the United Nations states, “We
have had some difficulty in interpreting the term ‘underdeveloped countries’ . We use it to mean
countries in which per capita real income is low when compared with the per capita real income
of the United States of America, Canada, Australia and Western Europe. In this sense, an
adequate synonym would be poor countries”.
Bangladesh has been on the list of Least Developed Countries (LDC) list since 1975 but last
week, the country has been removed from the list. Bangladesh is expected to get a status as
developing country by 2024. This means that Bangladesh officially is not an underdeveloped
country

Background of study:
GDP per capita is often considered an indicator of the standard of living of a given country, as it
reflects the average wealth of each person residing in a country. It is therefore the standard
method used to compare how poor or wealthy countries are in relation to each other. With2018
coming to a close, we decided to take a look at our forecasts for GDP per capita from 2019 to
2023 for the 127 countries we cover to get an idea of what countries are the poorest currently and
which will be making a leap toward becoming wealthier in the coming years.  The projections
used in this study are Consensus Forecasts based on the individual forecasts of over1000 world-
renowned investment banks, economic think tanks, and professional economic forecasting firms.
Other common constraints on development are high economic poverty, hunger, high mortality
rates, unsafe water supplies, poor education systems, corrupt governments, war, and poor
sanitation.
Objective of the study:
In this module, we discuss some of the components of economic growth, including physical
capital, human capital, and technology. Specific objectives of the diagnostic study are to:
● Raising peoples' living levels, incomes, and consumption, levels of food, medical
services, education through relevant growth processes
● Creating conditions conducive to the growth of peoples' self-esteem.
● Increasing peoples' freedom to choose by enlarging the range of their choice.
● Human development is defined simply as a process of enlarging these and other choices.
The ultimate aim of development is not or should not be to create more wealth or achieve
higher economic growth. It is or should be to expand the range of choices for every
human being.

UN list of least developed countries

 Afghanistan
 Angola
 Bangladesh
 Benin
 Bhutan
 Burkina Faso
 Burundi
 Cambodia
 Central African Republic
 Chad
 Comoros
 Democratic Republic of the Congo
 Djibouti
 Eritrea
 Ethiopia
 Gambia
 Guinea
 Guinea-Bissau
 Haiti
 Kiribati ETC
The following points highlight the fourteen basic characteristics of underdeveloped
countries. Some of the characteristics are: 1. Low Level of Income 2. Mass Poverty 3. Lack
of Capital Formation 4. Heavy Population Pressure 5. Agricultural Backwardness 6.
Unemployment Problem 7. Unexploited Natural Resources and Others.

Characteristic # 1. Low Level of Income:

Underdeveloped countries are maintaining a very low level of income in comparison to that of
developed countries. The per capita incomes of these groups of countries are extremely low if we
compare it with that of developed countries. Moreover, inequality in the distribution of income
along with this low level of income worsens the situation in these economies to a disastrous
level.

Characteristic # 2. Mass Poverty:

Existence of chronic mass poverty is another characteristic of underdeveloped economies. This

problem of poverty arises not due to any temporary economic maladjustment but arises mainly
due to existence of orthodox methods of production and social institutions. The degree of
poverty in these economies gradually increases due to increase in its size of population, growing
inequality in income and increasing price level.

Nearly 76.8 per cent of the world populations are living in those underdeveloped or developing
countries of the world, enjoying only 15.6 per cent of total world GNP.’ IIIc these countries,
majority of the population are living below the poverty line.

Characteristic # 3. Lack of Capital Formation:

Developing or underdeveloped countries of the world are suffering from poor rate of capital
formation. As the level of per capita income in these countries is very low thus their volume and
rate of savings are also very poor. This has resulted lack of capital formation and which is again
responsible for low rate of investment in these countries.

As for example, the rate of investment in countries like India and Pakistan is lower than even 10
per cent but, on the other hand, the same rate is ranging between 15 to 30 per cent in developed
countries like U.S.A., Canada etc. Thus this poor rate of capital formation is one of the major
obstacles towards the path of development of these underdeveloped countries of the world.

Characteristic # 4. Heavy Population Pressure:

The underdeveloped countries are also characterized by heavy population pressure. The natural
growth rate of population in these countries is very high due to its prevailing high birth rate and
falling death rate. This excessive population pressure has been creating the problem of low
standard of living and reduction in the average size of holding.

This has also resulted in low rate of capital formation in these countries. The population in these
countries is increasing by 2 to 3 per cent per annum which has created various problems like
scarcity of agricultural land, small size of holding, problem of unemployment, food crisis,
poverty etc.

Characteristic # 5. Agricultural Backwardness:

The underdeveloped countries are also suffering from agricultural backwardness. Although being
the most important sector, agricultural sector in these countries remains totally underdeveloped.
But what is more peculiar is that these countries are depending too much on this agricultural
sector.

Nearly 60 to 70 per cent of the total population of these countries is depending on agriculture and
about 30 to 40 per cent of the total GNP of these countries is generated from agricultural
production. Agricultural productivity in these countries remained still very poor in spite of its
great importance.

In these underdeveloped countries, agriculturists are still following traditional methods and are
applying modernized techniques on a very limited scale.
Characteristic # 6. Unemployment Problem:

Excessive population pressure and lack of alternative occupations have resulted in huge
unemployment and underemployment problem in these underdeveloped countries. In the absence
of growth of alternative occupations both in the secondary and tertiary sector of these countries,
this increasing number of population is being thrown on land to eke out their living from
agricultural sector.

This sort of increasing dependence on agricultural sector leads to disguised unemployment or

under-employment in these economies to a large scale. Moreover, problem of educated
unemployment in these economies is also increasing gradually day by day due to lack of
industrial development.

Characteristic # 7. Unexploited Natural Resources:

For maintaining a rapid pace of economic growth in these underdeveloped countries, possession
of different types of natural resources in sufficient quantity and its utilization are very important.
But under-developed countries are either suffering from scarcity of raw materials or from un-
exploited natural resources of its own.

If we look at the endowment position of these countries then we can see that some of the
underdeveloped countries are having natural resources like land, water, minerals, forest etc. in
sufficient quantity but these resources remain largely under-utilized or even untapped due to
various difficulties faced by these countries.

These difficulties include inaccessibility of the region, shortage of capital, lack of proper
attention, primitive technology, transport bottlenecks and small extent of the market. Thus by
utilizing its natural resources, underdeveloped countries can develop their economies with
minimum initiative of their own.

Characteristic # 8. Shortage of Technology and Skills:

Underdeveloped countries are facing low level of technology and acute shortage of skilled
manpower’s. Poor technology and lower skills are responsible for inefficient and insufficient
production which leads to poverty of masses. The pace of economic growth in these countries is
very slow due to application of poor technologies.

But the application of modern sophisticated technology both in agricultural and industrial sector
is of utmost need in these countries. This requires sufficient amount of capital, technological
advancement and training.

Characteristic # 9. Lack of Infrastructural Development:

Lack of infrastructural development is a common feature of underdeveloped countries. In respect

of transportation, communication, generation and distribution of electricity, credit facilities,
social overheads etc. these countries are very much backward than most of the developed
countries. Thus due to inadequate infrastructural facilities, the pace of economic development in
these countries are very slow.

Characteristic # 10. Lack of Industrialization:

Underdeveloped countries are characterized by lack of industrial development. The pace of

industrialization in these countries is very slow due to lack of capital formation, paucity in the
supply of machinery and tools and also due to lack of initiative and enterprise on the part of
people of these countries.

In spite of having huge potential for industrial development, these countries could not develop
the industrial sector on a sound footing. Moreover, whatever industrial development that has
been achieved by these countries are very much restricted only to some limited areas.

Characteristic # 11. Lack of Proper Market:

Underdeveloped countries are also suffering from lack of properly developed market. Whatever
market these countries have developed, these are suffering from number of limitations viz. lack
of market information, lack of diversification, lack of proper relation or connection between
markets, lack of adequate demand etc.

Characteristic # 12. Mass Illiteracy:

Underdeveloped countries are mostly characterized by the existence of mass illiteracy. Due to
illiteracy the people in these countries are very much superstitious and conservative which is
again responsible for lack of initiative and enterprise on the part of people of these countries.
Characteristic # 13. Poor Socio-Economic Condition:

Underdeveloped countries are also suffering from totally poor socio-economic conditions. The
path of economic development in these countries is being obstructed by various socio-economic
factors like-joint family system, universal marriage, costly social customs and the law of
inheritance.

Characteristic # 14. Inefficient Administrative Set Up:

Underdeveloped countries are also suffering from its existing inefficient administrative set up. In
the absence of efficient and sound administrative set up, these countries are suffering from lack
of proper economic organization, lack of investments and lack of appropriate decisions leading
to total mismanagement of these economies.
WHY BANGLADESH UNDER DEVELOPED COUNTRIES:

An underdeveloped country is a nation that lags behind most others in industrialization,

education, standard of living, healthcare, life expectancy and other technological and cultural
norms. Many things prevent underdeveloped nations from developing. Most of these countries
are extremely poor and do not have the resources to develop programs to educate and train
citizens to farm or perform skilled work. Malnutrition also lowers life expectancy and renders
many incapable of working. Basic needs such as food, clothing and shelter are scarce.
Sometimes, natural disaster impedes underdeveloped countries even further.

There are many Causes responsible for Underdeveloped in Bangladesh-

(1) Lack of Transport Facilities.

(2) Non-Availability of Power.

(3) Size Local Market.

(4) Lack of Trained Persons.

(5) Absence of Facilities to the Workers.

(6) Lack of Repair Facilities.

(7) Lack of Subsidiary Industries.

(8) Rapid Population Growth.

(9) Low Per Capita Income.

(10) Problem of Capital.

11) Lack of Banking and Credit Facilities.

13) Problem of Literacy.

(14) Social Restraints.

(15) Lack of Industrial Leadership.

(16) Strains on Public Administration.

(17) Strict Licensing System.

(18) Unforeseen Calamities.

(19) Unfavorable International Conditions.

(20) Inefficient Public Administration.

(21) Defective Tax Structure.

(22) Lack of Natural Resources.

(23) Political Instability.

Problems Faced by Less Developed Countries
Population Growth

Among all the developing countries, population growth remains one of the reasons for these
countries to remain poor. To take specific examples, both India and China have historically been
among the poorer countries because of their huge populations. It was only after the economic
liberalization and opening up of their respective economies that these countries began on a
growth trajectory similar to that of the developed countries.

Governmental Efforts to Combat Population Growth

Ever since India became independent from the erstwhile colonial rule of the British in 1947, one
of the cornerstones of its policy has been to reduce population. The efforts of the Indian
government in this regard have been mixed due to a combination of ignorance, tradition and
other factors that are largely due to the lack of economic growth. The deadly combination of low
income coupled with large families makes for social instability and poor human development.
This has had a cascading effect on the employment and the social welfare programs of the
government – though well intentioned- have not had the desired effect. On the other hand, ever
since India started liberalizing its economy in the 1990’s, the rate of population growth has fallen
marginally leading to optimism that the endemic problems associated with population growth
can be tackled, after all.

Education for Women to Reduce Population

With access to education for the women, it has been easy to empower them to take decisions
regarding reproductive health and raising of children in a “modern” or a manner that is healthy.
This has led to low mortality rates and voluntary participation in birth control programs. In this
context, China with its rigorous application of the “one-child” norm has been far more successful
in fighting the menace of population growth.

Shortage of Resource Capital

It has been often stated that one of the reasons for the under-development of certain regions has
been due to the “tyranny of geography”. This is true in the case of many of the less developed
countries. Because of the non-availability of resources, many countries have traditionally been at
the bottom of the economic ladder. Some examples are the South East Asian countries, who till
they started on a path of export led growth were stagnant in economic development.

Successful Countries
The countries of South Korea, Thailand and others do not have abundant resources. Instead they
focused on what economists called the “human capital” for their development (we shall see more
of this in the next section). Thus economic growth in the form of development of sectors that are
not “resource intensive” has given these countries a lead over the others.

Economic Growth in Asian and African Countries

In contrast, several other regions of Asia and Africa have suffered due to lack of resource capital
when they started on a path of economic development. However, the negative side of economic
growth is that there has been an indiscriminate pillage of the natural resources in many of these
countries leading to degradation and loss of competitiveness.

Scarce Human Capital

It is a corollary of poor economic growth that the human development in terms of the social
indicators also lags behind the developed countries. Because of lack of access to education and
other social needs, the populace of the less developed countries often lack the skills to compete
in the global economy.

Examples from Tiger Economies

The countries like the South East Asian “tiger economies” circumvented this by investing
heavily in the “human resource” component of development thereby giving them an edge over
many of the countries that even now do not have a skilled workforce and thus are unable to reap
the advantages of globalization.
On the other hand, high economic growth creates its own demand for skilled resources that many
countries often lag in the supply side. Once a country starts on the path to economic
development, the needs of the economy in terms of requirement for human capital increases and
the country has to keep pace with the demand by augmenting the social infrastructure and thus be
able to retain the competitive edge.

Services Sector and India

An example of a country that has made good use of the development of human capital is India,
where with its Services sector growth has ensured that the overall growth rates for the economy
remain high? Despite the fact that the overall social indices are somewhat poor, the availability
of skilled resources has benefited the services sectors like the Software and the Outsourcing
industry.

Poor Infrastructure
Among the many ills that the less developed countries face, Infrastructure or the lack of it is one
of the most prominent factors for poor economic growth. It is a vicious cycle as massive
investments are needed to develop the infrastructure and poor countries cannot afford the same.
And unless infrastructure is improved, the economies cannot “take off” in a significant way.

China and the Great Leap Forward

Thus, it becomes a loop or a cycle of stagnation that cannot be broken without assistance from
the multilateral funding institutions like the IMF and the World Bank. It is instructive to learn
from the experiences of China that has managed a “leap of growth” due to its ability to ramp up
its physical infrastructure to a large extent and then reap the benefits of being the “factory to the
world” in the manufacturing space.
In contrast, countries like India that are attempting to get into the high growth mode have seen
that infrastructural constraints have been dragging the country down when the other sectors like
the Information Technology industry are posting high rates of growth.

Regional Conflict
The best examples of countries that have had poor economic growth due to regional conflicts are
the African economies that are perpetually at war with each other and within themselves. Despite
the availability of resources in the Western African countries, the state of civil war in many of
these countries has made the economic development of them stunted.
Poor economic growth brings with it the attendant problems of scarcity and competition for these
scarce resources with the result that there is often an internecine battle among different ethnic
groups for the same resources. Thus, these countries do not find a way out of the regional
conflicts without intervention by the United Nations and other regional powers and that too the
peace brokered by them is often fragile and prone to disruption.
On the other hand, high rates of economic growth fuel a different kind of conflict, namely the
race for the spoils of growth and this can be seen in some of the South Asian countries, which,
despite having high rates of growth are dogged by conflict arising.

Corrupt Systems and Institutions

This is an endemic problem in many of the countries that became independent from the colonial
powers in the latter half of the 20th century. Poor economic growth leads to bad governance and
a lack of respect for the rule of the law.
Compared to the western countries where the institutions were established centuries ago and
there is a broad consensus among civil society on the nature of governance and the welfare state,
in many of the less developed countries, the institutions are under attack from vested interests
and the common person pays a price for bad governance.

Conclusion
In developing countries, the relatively low consumption of energy is both a cause and an effect
of existing development problems. Development in the South is likely to result in an increasing
demand for energy. How that energy is to be obtained is of vital significance.
A central theme of Agenda 21 is that environmental problems, and poverty and
underdevelopment, are mutually reinforcing. Present patterns of household energy use in much
of the developing world are a contributory factor in this cycle, and it is clear, that such
consumption is not only unsustainable but also constitutes an impediment to social and economic
progress. The forecast increase in demand for energy, if left uncontrolled, will only be possible at
the high price of a destroyed environment.
Integrated household energy programmed tackle the problem from both ends - working directly
for the environment by increasing sustainable energy supply, seeking clean and practical fuel
alternatives, reducing consumption, environmental pollution and degradation, whilst
simultaneously providing direct and tangible benefits to energy users, particularly the poor and
vulnerable.
Such programmers can only be widespread and successful if appropriate institutional backing is
available. Programmers must aim at the establishment of self-sustaining, commercial systems
which can continue after any initial and temporary subsidies are withdrawn. The policies of the
relevant institutions must be aligned to create an environment where such systems can operate,
encouraging an energy awareness in all actors in the development process.

Reference
1. https://www.managementstudyguide.com/problems-faced-by-less-
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2. https://www.economicsdiscussion.net/underdeveloped-
countries/underdeveloped-countries-meaning-and-classification-of-
definitions/18975
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5PuAhUOH7cAHe1yBuAQ_AUoAXoECBUQAw&biw=1536&bih=750
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