Common characteristics of developing countries include: low per capita incomes below $600 per year on average, high rates of poverty, dependence on agriculture as the main occupation, high population growth rates that outpace economic development, and underutilization of natural resources due to a lack of capital and outdated techniques. Many developing countries also face problems like large debts, unemployment, a lack of infrastructure like transportation, and political instability that hinders long-term investment.

1. 1
What are the common characteristics of Developing Countries/LDCs/UDCs/Third World
Countries?
Introduction:
There are about 6.9 billion (71) people living in the world. 1/6th
(72) of the population is living in least
developed countries having a per capita income of around $600 (73) a year. The poor countries with low
per capita income are commonly known as LDCs (Least Developed Countries), UDCs (Under Developed
Countries), Third World Countries, or Developing Countries.
Meaning of Under Development:
There is no precise definition of Under Development. However, some economists have defined it in their
words as follows:
• Prof R. Nurkse:
“Under developed countries are those which compared
with the advanced countries are under equipped with
capital in relation to their population and natural
resources”.
• Stanley:
“A country is said to be under developed which is
characterized by the co-existence in greater or less
degree, of unutilized or underutilized manpower on the
one hand and of unexploited natural resources on the
other”.
• UN Reports:
“An under developed country is one whose per capita
income is lower than US, UK, Canada and the Western
European Countries”.
Common Characteristics of LDCs:
According to United Nations’ data, there are 130 (74) developing countries in the world. While almost all
are poor in money terms; but there are variations in their cultural, social, political and economic
conditions. Despite of this, LDCs share some common characteristics which are as follows:
• Burden of International Debt:
Most of the developing countries are depending upon foreign economic loans to meet the short fall
in their savings and to finance their projects. As the years pass, this burden is increasing on Pakistan.
Pakistan’s outstanding external debt is around $ 58 billion (96).
• Low per capita income:
Majority of the people living in LDCs are poor. Poverty is reflected in low per capita income. They are
unable get proper food, education, shelter, clothes, and other basic needs. In Pakistan the per capita
income is $1,254 (64) and the literacy rate is 57% (1).
• Unproductive Uses of Funds:
The limited savings that exist in LDCs is mostly used for unproductive purposes and excessive
military expenses. These expenditures provide few economic development benefits.
• Unsuitable Investment Decisions:
It is also observed that funds available are usually invested in those capital goods that are not
suitable for LDCs. For example, the amount spent on solar energy may have been more useful if
spent on hydel projects.
Tamur Iqbal
HAFIZABAD GROUP OF COLLEGES, HAFIZBAD

2. 2
• Agriculture as Main Occupation:
In LDCs most of the people live in rural areas so their main occupation is agriculture. They usually
use primitive and old fashioned techniques of productions so the yield per acre is generally low. In
Pakistan about 45% (11) of the labour force is employed in agriculture sector.
• Under-Utilization of Natural Resources:
Most of the LDCs are rich in natural resources but these resources are usually unutilized, under-
utilized, or misutilized. This is mainly due to lack of capital and primitive (old) techniques.
• High Rate of Population Growth:
In LDCs the population growth rates are very high. The development made by low per capita income
and low capital formation is swallowed up by increased population. As a result there is no
improvement in living standard of the people. In Pakistan the population growth rate is 2.07% (9)
which is very high.
• Unemployment and Disguised Unemployment:
Vast unemployment and disguised unemployment is another notable feature of LDCs. In Pakistan
unemployment rate is estimated to be 5.6% (7).
• Low Level of Productivity:
In LDCs the labour is inefficient, not properly trained and educated, that’s why level of productivity
is very low.
• Lack of Initiative:
The people of LDCs have less capital that is why they do not afford to take any risk. They fear to put
their investments in new projects. There is lack of dynamic leadership in LDCs.
• Deficiency of Capital:
Deficiency of capital is another common characteristic of LDCs. The capital deficiency is mainly due
to:
o Low per capita income
o Low rate of savings
o Low rate of investment
o Inequalities of wealth
o More expenditure on consumption, etc.
• Backward State of Technology:
All the LDCs are in the backward state of technology. This backwardness is due to:
o Lack of capital
o Misallocation of resources, etc.
• Dependence on Exports of Primary Products:
LDCs are mostly producing primary products (agricultural products, raw materials, etc) and
exporting them to developed countries. Then these LDCs import finished products, capital goods
and machinery from the developed countries.
• Unskilled Workers:
LDCs are usually suffering from an abundance of unskilled, untrained, uneducated workers. The
quality of population as judged by its health, education, and skills is very poor.
• Brain Drain:
There is an outflow of best and brightest students from the LDCs (Brain Drain). Many of these
students do not return to their home countries because they get better salaries and other benefits
in developed countries. In this way they serve the developed countries and add to their economic
development.
Tamur Iqbal
HAFIZABAD GROUP OF COLLEGES, HAFIZBAD

3. 3
• Government Control by Wealthy Persons:
In LDCs generally wealthy persons get hold of government offices and poor masses remain unable to
get access to them. These wealthy people are more interested in their personal interests rather than
national interests.
• Dualistic Economy:
Dualism means social and economic division in the economy. In LDCs some areas and sectors are
well developed and at the same time there are some regions and sectors which lack even basic
needs. The rich is getting richer and the poor is getting poorer.
• Improper Capital Markets:
In LDCs the capital markets are not properly organized. That is why the savings are not efficiently
channeled to productive projects.
• Poor Transportation System:
There is non-availability of proper roads, and other transportation means which increases the cost
of production of LDCs.
• Lack of Power Resources:
Usually the LDCs are not able to generate sufficient electricity for running their industries. In
Pakistan there is a huge problem of load shedding. Moreover, LDCs also have to depend upon others
for their oil, gas, and other power needs.
• Political Instability:
Many of the LDCs face the problem of political instability. That is why these countries remain unable
to get benefit from long-term productive projects.
• Hoarding:
In LDCs the people generally have a habit to store precious metals. They even keep basic necessities
stored in their godowns and wait for the prices to rise. This leads to high prices, and finally to low
savings and investment.
Summing Up:
As discussed earlier, each and every country has its different political, social, cultural, and economic
conditions, yet there are many characteristics which are similar in almost all the developing countries. A
developing economy is characterized by many of the above characteristics.
Tamur Iqbal
HAFIZABAD GROUP OF COLLEGES, HAFIZBAD