Common Characteristics of Developing
Countries and Diversity Among
Developing Countries
7 Common Characteristics of Developing
Countries
Development Economist Michael P
Todaro produced a list of the common
characteristics of developing nations
and these are as follows:
Low standards of living
Low levels of productivity
High rates of population growth and
dependency burdens
High and rising levels of unemployment &
underemployment
Dependence on agricultural production
and primary product exports
Prevalence of imperfect markets and
limited information
Dominance, dependence and vulnerability
in international relations
Low Standards of Living
It is tend to be experienced by the majority
of the population in the world.
The main indicators for low standard of
living are as follows:
High poverty levels that denote very low
income per household
High levels of inequality
Poor housing
Low standards of health
High infant mortality rates
High levels of malnutrition
Lack of education
Low Levels of Productivity
This also means output per person
The main causes for low levels of
productivity are as follows:
Low education standard within the
countries
Low level of health among workers
Lack of investment in physical capital
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.
CRUDE BIRTH RATE is the number of
resident live births for a specified
geographic area (nation, state, county,
etc.) during a specified period (usually
a calendar year) divided by the total
population (usually mid-year) for that
area and multiplied by 1,000.
In 2020, a total of 1,528,684 live births
were registered in the Philippines, which is
equivalent to a crude birth rate (CBR) of
14.1 or 14 births per thousand
population.(Source: PSA)
In 2020, the World’s Crude Birth Rate is at
17 (Source: World Bank)
But in some developing countries, it can
go as high as 50 per thousand.
High Rates of Population Growth and
Dependency Burdens
The high crude birth rates in developing
countries tend to be transformed in high
dependency ratios.
The high crude birth rate means that there
are lots of young people under the age of
15 in developing countries.
Those of working age, usually between 15
to 64 years old, have to support a
much larger proportion of children than
does the work force in developing
countries.
Dependency ratio – is the percentage of
those who are under 15 and over 64
years old, expressed as percentage of
those of working age which is 15-64
years old
Dependency ratio = (% of pop. under 15)
+ (% of pop. over 64)
(% of pop. Between 15 to 64)
High and Rising Levels of
Unemployment and Underemployment
Developing countries tend to have
relatively high levels of unemployment,
usually between 9% and 16% of the labor
force.
In the Philippines, unemployment rate is at
4.3% in December 2022.
In addition to the official unemployment
statistics, there are 3 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 are put together
that the full extent of unemployment
in developing countries can be
understood.
Substantial Dependence on
Agricultural Production and Primary
Products Export
The problem of over-dependence on
agricultural commodities was examined
in the context of the Terms of Trade.
Developing countries are mostly producing
primary products (agricultural
products, raw materials, etc) and exporting
them to developed countries.
Then these developing countries import
finished products, capital goods, and
machinery from the developed countries.
Some agricultural products are seasonal.
This means that income will not be fully
distributed the whole year if developing
countries highly dependent on seasonal
agricultural products.
Agriculture is the primary and often only
source of income for poor rural people,
most of whom depend on subsistence
farming and fishing for their livelihoods.
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 been promoted and encouraged
by international bodies like IMF and 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 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 move around the country,
and even 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.

Dominance, Dependence and
Vulnerability in International Relations
In most 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.
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 for
the developing countries is 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 like:
1. Resource Endowment
2. Historical Background
3. Geographic and Demographic Factors
4. Ethnic and Religious Breakdown
5. The Structure of Industry
6. Per Capita Income Levels
7. Political Structure
Resource Endowment
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 be immensely observed
between developing countries.
Take for instance Angola – the country
possesses oil and diamonds yet it is still a
developing country.
Chad – a country that lacked physical
resources, but the discovery of oil and
subsequent production since 2003 may
make a large impact 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 did
they have is 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.
Historical Background
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
dependence was given freely or whether it
had to be fought.
It could be argued that countries gained
some positive outcomes form colonization,
such as Singapore and Hongkong and
some countries did not like 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.
Geographic and Demographic Factors
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, India, and
Demographic Republic of Congo
Other countries are small in terms of
landmass like Eswatini, 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 and Fiji
with less than 1 million people.
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.
Example of countries that more religiously
homogenous would be Morocco and
Jamaica.
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 main exporters of services in
the form of tourism.
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 among developing
countries.
Venezuela has a high GDP per capita, but
it is still very much a developing country.
Political Structures
Developing countries have different
political structures from each other.
Democracies – such as Brazil, Indonesia,
Philippines, and Mexico
Monarchies – Brunei and Bhutan
Military Rule – Myanmar and Pakistan
Single Party Rule – China, Cuba, and
Syria
Transitional Political System – where a
country is in transition often caused by
conflict and civil war and cannot be
classified like South Sudan
Within each structure, there are many
sub-structures: Democracies may be
presidential systems, parliamentary
republics, and semi-presidential systems
The main point is that with developing
countries being so diverse in their systems
or government, it is challenging to
establish one-size-fits-all solutions to
developmental concerns.
To conclude, we can say that while there
are some common characteristics that are
held by developing countries to a certain
degree, there are also several significant
differences.
One must be very cautious in making
generalizations that imply that all
developing countries are the same.
Domestic Problems and Policies
Definition of Poverty
• Poverty is generally defined as a state of
lack of resources or material possessions,
including food, shelter, clothing, and basic
services such as healthcare and
education.
• It is often characterized by inadequate
income or financial resources, limited
access to economic opportunities, and
social exclusion.
• Poverty is reflected in low GNP per
capita.
• As per World Bank, low income
economies had GNP per capita of less
than USD 1,085
• Philippines Gross National Income: per
capita data was reported at 61,360.702
(USD 1,116) PHP in Dec 2022. This
records an increase from the previous
number of 50,121.252 (USD 911) PHP for
Sep 2022.
Absolute Poverty
• Absolute poverty refers to the most
severe form of poverty, where individuals
or households lack the basic necessities
of life, such as adequate food, safe
drinking water, proper sanitation facilities,
basic healthcare, and shelter.
• Absolute poverty is often defined based
on a certain minimum standard of living,
such as the World Bank's definition of
poverty, which is based on an income of
less than $1.90 per day. This definition is
used to compare
poverty rates across countries and
regions.
Lorenz Curve
• A Lorenz curve, developed by American
economist Max Lorenz in 1905, is a
graphical representation of income
inequality or wealth inequality.
• It is a graphical representation of income
distribution that illustrates how income is
distributed among a population.
• The graph plots percentiles of the
population on the horizontal axis
according to income or wealth and plots
cumulative income or wealth on the
vertical axis.
• It is constructed by plotting the
cumulative share of income received by
each percentile of the population against
the corresponding cumulative percentage
of the population.
• The closer the Lorenz Curve is to the
diagonal line (the line of perfect equality),
the more equal the income distribution,
whereas the farther the Lorenz Curve is
from the diagonal, the more unequal the
income distribution.
Rate of Population Growth between LDCs
and
Developed Countries
• Historical trends: Modern developed
nations such as the United States,
Canada, and Western European countries
have experienced relatively slow
population growth rates in recent decades
due to declining fertility rates and longer
life expectancies.
• In contrast, many LDCs have
experienced rapid population growth rates
over the past several decades due to high
birth rates and declining mortality rates.
Rate of Population Growth between
LDCs and Developed Countries
• Fertility rates: Fertility rates (the average
number of children born per woman) are
generally much higher in LDCs than in
modern developed nations.
• This is due to factors such as limited
access to family planning services, cultural
attitudes towards large families, and
higher levels of poverty and limited
education.
• Mortality rates: Mortality rates (the
number of deaths per 1,000 people per
year) have generally declined in both
LDCs and modern developed nations, but
LDCs still have higher mortality rates due
to factors such as poor healthcare
infrastructure, limited access to healthcare
services, and high rates of infectious
Diseases.
• Age structure: LDCs generally have
younger populations, with a higher
proportion of children and young adults. In
contrast, modern developed nations
have aging populations with a higher
proportion of older adults.
• This is due to differences in fertility rates,
mortality rates, and patterns of migration.
• Population size: LDCs generally have
larger populations than modern developed
nations, due in part to higher fertility rates
and younger age structures.
• This can place greater strains on
infrastructure, healthcare systems, and
social services in LDCs.
• Overall, the rate of population growth in
LDCs and modern developed nations
differs due to a combination of factors,
including fertility rates, mortality rates,
and age structure.
• While modern developed nations have
experienced slower population growth
rates in recent decades, LDCs continue to
experience rapid population growth,which
can have significant economic, social, and
environmental implications.
Underutilization of Labor
• The underutilization of labor occurs when
there are more workers than available jobs
or when workers are not fully employed in
their current job.
Manifestations of Underutilization of
Labor
• Unemployment: Unemployment is the
most visible manifestation of
underutilization of labor.
• It occurs when workers are actively
seeking employment but are unable to find
a job.
• Unemployment can be cyclical,
seasonal, or structural in nature.
• Underemployment: Underemployment
occurs when workers are employed in jobs
that do not fully utilize their skills,
education, or experience.
• This includes workers who are working
part-time when they would prefer full-time
employment or those who are working in
jobs below their skill level.
• Discouraged workers: Discouraged
workers are individuals who have given up
looking for work due to a lack of available
jobs, or who have been unable to find
work for an extended period.
• Discouraged workers are not included in
official unemployment statistics.
• Hidden unemployment: Hidden
unemployment refers to individuals who
are not included in official unemployment
statistics but are also not fully employed.
• This includes workers who are
underemployed, as well as those who are
not actively seeking employment but
would like to work if a suitable job were
available.
Brain waste: Brain waste occurs when
highly skilled workers are employed in
jobs that do not fully utilize their education,
experience, or skills.
• This includes workers who are
overqualified for their current job, or who
are employed in low-skilled jobs despite
having advanced degrees or specialized
training.
• Youth unemployment: Youth
unemployment is a particular
manifestation of underutilization of labor
that affects young people who are entering
the workforce for the first time.
• High youth unemployment rates can
have long-term economic and social
implications, including lower lifetime
earnings and increased social inequality.
Overall, the underutilization of labor can
have significant economic, social, and
psychological impacts, including lost
productivity, decreased economic growth,
and increased poverty and inequality.
• Addressing the various manifestations of
underutilization of labor requires a
comprehensive approach that includes
policies to promote job creation, provide
education and training, and support
workers who are underemployed or
unemployed.
Government Policies that Promote
Balance Between
Urban and Rural Economic and Social
Opportunities
• Investment in rural infrastructure:
Investing in rural infrastructure, such as
roads, bridges, and water supply systems,
can help to attract new businesses and
create job opportunities in rural areas.
• This can also help to connect rural
communities with urban centers, making it
easier for people to access economic and
social opportunities in both urban and
rural areas.
• Promotion of rural entrepreneurship:
Encouraging entrepreneurship in rural
areas can help to create new businesses
and job opportunities.
• Governments can provide financial and
technical assistance to entrepreneurs, as
well as create policies that support the
growth of rural businesses.
Government Policies that Promote
Balance Between
Urban and Rural Economic and Social
Opportunities
• Rural development policies:
Governments can create policies that
focus specifically on rural development,
such as programs that support sustainable
agriculture, rural tourism, and natural
resource management.
• These policies can help to promote
economic growth and social development
in rural areas.
• Inclusive policies: Governments should
ensure that policies are inclusive and
considerate of the needs and aspirations
of rural communities.
• This includes policies that promote
gender equality, social inclusion, and
environmental sustainability.
Government Policies that Promote
Balance Between Urban and Rural
Economic and Social Opportunities
• By implementing these policies,
governments can help to promote a better
balance between urban and rural
economic and social opportunities,
reducing the disparities between urban
and rural areas, and promoting more
equitable and sustainable development.
Integrated Rural Development
• Integrated rural development refers to a
comprehensive and multi-sectoral
approach to rural development that takes
into account the
interconnected nature of economic, social,
and environmental factors.
• This approach aims to promote
sustainable and inclusive development in
rural areas by addressing the needs and
aspirations of rural communities in a
holistic manner.
Integrated Rural Development

• Integrated rural development involves
the coordination of different sectors, such
as agriculture, health, education,
infrastructure, and the environment, in a
way that maximizes their positive impact
on rural communities.
• For example, improving access to
education and healthcare services can
help to improve the overall health and
wellbeing of rural residents, which in turn
can have positive impacts on their
productivity and economic opportunities.
• Similarly, investments in rural
infrastructure can help to improve the
connectivity of rural areas, making it
easier for rural residents to access
markets, social services, and other
economic opportunities.
• Integrated rural development also
involves the participation of rural
communities in the development process,
ensuring that their needs, aspirations, and
perspectives are taken into account.
• This participatory approach can help to
build local ownership and support for
development initiatives, leading to more
sustainable and inclusive outcomes.
• In summary, integrated rural
development involves a comprehensive
and participatory approach to rural
development that addresses the
interconnected nature of economic, social,
and environmental factors.
• By taking a multi-sectoral approach and
engaging rural communities in the
development process, integrated rural
development aims to promote
sustainable and inclusive development in
rural areas.
Economics of Education
• The economics of education refers to the
study of how education affects economic
outcomes, and how economic factors
influence the production, distribution, and
consumption of education.
• This field of study focuses on the
economic analysis of education policies,
programs, and systems, and aims to
understand how education can contribute
to economic growth and development.
• The economics of education involves
analyzing the costs and benefits of
education, both at the individual and
societal levels.
• This includes examining the impact of
education on labor market outcomes, such
as employment, wages, and productivity,
as well as on social outcomes, such as
health, crime, and civic engagement.
• Economists also study the factors that
influence educational attainment, such as
family background, school quality, and
government policies.
• The economics of education also
involves examining the production and
distribution of education.
• This includes analyzing the role of
government in funding and regulating
education, as well as the impact of market
forces on education provision.
• Economists also study the efficiency and
effectiveness of different education
systems and programs, and seek to
identify ways to improve educational
outcomes while minimizing costs.
• Overall, the economics of education is
an interdisciplinary field that combines
insights from economics, education,
sociology, and psychology to understand
how education cann contribute to
economic and social development, and
how economic factors influence the
production, distribution, and consumption
of education.