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Home Developing Countries and Their Features Structure of Developing Countries


Structure of Developing Countries:


The structure of Third World/developing Countries will be evaluated by considering the (1) size of the county, (2) historical back-ground of the country, (3) resource endowments of the country, (4) relative importance of public and private sectors in the country, (5) nature of industrial sector in the country. (6) degree of dependence on external economic and political forces, (7) distribution of power in a country, (8) ethnic and religious composition.


Now we consider each of the component which will show the similarities and dissimilarities amongst the countries in Africa, Asia and Latin America.


Dissimilar Characteristics of Developing Countries:


(1) Size And Income Level: The physical size of a country, its population and its GNP per capita are the important determinants of the economic position of a country. Moreover, these factors also differentiate. The Third World countries from one another. Out of 160 UDCs (UN Classification) 87 had fewer than 5 million people, 58 fewer than 2.5 million. There were 38 countries whose population was less than 5 lac. In Third World nations there are large and populated nations like Brazil, India, Pakistan, China, Egypt and Nigeria as well as the small countries like Paraguay, Nepal, Jordan, and Chad. The large and high countries have more resources, extended markets and they have lesser dependence on foreign sources and material etc. But the large sizes also create the problems regarding regional imbalances, national cohesion and of administration.


Thus in the "Third World Scenario" one finds the most populous nation 'India' with the population of approximately 1016 million in 2000 and GNP per capita level of $460; and sparsely populated country. Singapore having the population of 4 million people and GNP per capita of $24740 in 2000, while US population was 282 million and GNP per capita was $34260 in 1998.


(2) Historical Background: Most of Asian and African Third World Nations have been the colonies of England, France, Germany, Spain and Holland etc. The economic, social educational and institutional structures of the poor countries have been molded by their former colonial rulers. These rulers introduced three important and tradition-shattering ideas: (i) private property, (ii) personal taxation, (iii) money taxation, rather taxation in kind. These ideas helped in eroding the autonomy of local communities, and they also developed certain other ways of exploitation.


The Latin American countries are furnished with a longer history of political independence and Spanish and Portuguese Colonial heritage. This shows that though the Latin American countries differ in their size and resources, yet these countries are similar in respect of economic, social and cultural institutions and face similar problems. As far as India and Pakistan are concerned the colonial heritages from Britain have been combined with local traditions. It means that in case of Pakistan and India we find 'Left Hand Drive', the British System of education, and of administration. While in case of Indonesia one finds "Dutch" influence; and in case of Vietnam one can easily observe the "French" ways and modes of life.


(3) Physical and Human Resources: The economic potentialities of any country depend upon its physical and human resources. The Third World Countries differ in respect of physical resources. As the Gulf States are rich in oil, heavy endowments of natural resources. While the countries like Bangladesh, Haiti, Yemen, Ethiopia, Chad etc., are highly deficient in natural resources, oil and fertile lands.


In respect of human resource endowments not only the quantity and quality of people counts, but also the cultural outlooks of the people, their attitudes toward work and their desire for self-improvement. Again, the administrative skill also determines the ability of public sector to alter the structure of production. In case of developing countries the traditions, religions, ethnic and sectarian setup differ which affect the human resources. Thus the differences in physical and human resources also differentiate themselves.


(4) Relative Importance of the Public and the Private Sectors: Most of the UDCs have "Mixed Economic Systems" i.e., they depend upon a mixture of public and private sectors in respect of allocation of resources and production of goods. The historical and political circumstances would determine their role in an economy. Generally, one finds the greater role of private sector in Latin American and South East Asian countries as compared with African and South Asian Countries. Again, in certain UDCs there is a greater role of foreign investment like Malaysia, Singapore, Thailand, Taiwan and Gulf-States etc. While in case of Pakistan, Bangladesh, Ethiopia, Chad and other African countries the foreign private investment has never been attractive.


The countries of Africa like Ghana and Kenya where there is shortage of skilled personnel the greater dependence was Iaid upon public sector, though now a days they are reverting towards privatization of

state-owned enterprises.


The different role of public and private sector lead to pursue different economic policies in different countries of Third World. The economies which are biased towards public sector stress upon more employment and rural development program. While in case of private oriented economies the tax holidays and greater concessions to the investors will be deemed more appropriate policies. Again, despite the existence of unemployment in ail of the UDCs the methods to tackle this menace will be different. Such all above mentioned confirm the diversity even in case of Third World Nations.


(5) Industrial Structure: In case of most of LDCs the main occupation is agriculture. Thus the people's economic, social and cultural life is highly influenced by agrarian set-up. The agriculture in these countries, is not just an occupation, it is also a way of life. The Asian agriculture system is close to Latin American's. However, the culture of Asia and Latin America differs. Again, as far as industrial structures are concerned they also differ in the developing countries. The Latin American countries which have a long history of independence and their incomes are higher than African and Asian countries follow advanced techniques of production in their industrial structures. However, in 1970s and 1980s the NICs like Malaysia, South Korea and Singapore etc. have shown marvelous growth in manufacturing. India has the largest manufacturing sector in the Third World countries.


However, it is small in relation to the country's big rural population. In 1996, in India, 65% of total labor force was engaged in agri. and 13% in industry. While in US 2% of manpower was engaged in agri. and 25% in industry. The share of US agri. in GDP was 2% and that of industry it was 29%. On the other hand, Afghanistan, Bhutan and Chad lack the industrial set-ups.


Despite so many common problems, the developing countries follow different development strategies depending on the nature, structure and degree of interdependence among its primary, secondary, and tertiary industrial sectors. In such state of affairs the growth rates and performance of industrial sectors would be different in most of the developing countries.


(6) External Dependence on Economic, Political and Cultural: The external dependence of a country is related to its size, resource endowments, and political history. In case of UDCs, this dependence is substantial. They are bound to export their raw material to the DCs, and they have to import finished products as well as technologies from them. Such technologies are hardly appropriate for the LDCs. In such situation, the growth of UDCs is highly dependent upon the behavior of DCs. The UDCs not only depend upon foreign goods and technologies, but they are highly influenced by the foreign values, patterns of consumption and attitudes towards life, work and self. This transmission phenomenon brings mixed blessings to most LDCs, especially which are highly ambitious for self-reliance. But it has also been observed-that the degree of such dependence also varies from country to country in case of Third World.


(7) Political Structure, Power and Interest Groups: The national approaches and strategies followed in UDCs are based upon political structures, vested interests and allegiances of ruling elites like landlords, urban industrialists, bankers, foreign investors, the military rulers and trade unionists etc., in addition to economic considerations. The constellation of interests and power among different segments of the populations of most

developing countries is itself the result of their economic, social and political histories and they differ from country to country in developing world. In Latin American countries there are the landowners; there are bureaucrats in Pakistan; there are money lenders in India; there are wealthy sheikhs of Gulf-States which play their role in the politics of their respective countries. Such de-fecto and de-jure rulers of these Third World countries are consisted of a few but powerful elites. It also means that there exist class conflicts and class rivalry in case of most of developing countries. The rich industrialists wish to join politics to safe-guard their interests. While the feudals involve in politics for the sake of prestige and power. In short in case of UDCs people come to power to get their interests, though these interests differ from country to country.


(8) Ethnic and Religious Composition: There was a time when there existed a cold war between two super powers USA and USSR and two economic systems like capitalism and socialism. But after the disintegration of USSR and Eastern Europe, so many developing countries curtailed their defense expenditures. But quite against it, within and outside countries, the conflicts and enmities rose. As after the incident of 11th September 2001, an era of terrorism is being observed. It is said that the countries which suffer from religious , ethnic and cultural differences, they will also face political instability. As a result, the development efforts will suffer.


The development of South Korea, Taiwan, Singapore and Hong Kong is attributed to their cultural homogeneity. While during 1990s, and then from 2000 to present, one finds the riots, terrorism, ethnic and linguistic tensions, civil war and conflicts in Afghanistan, Rwanda. Sri Lanka, Iraq, India, Somalia, Ethiopia, Liberia and Zairect etc.


Again the development efforts have been always suffered due to regional differences, caste system and ethnic groups and development remained confined to a few areas. No doubt, the differences do exist in US regarding culture, races and religion, but here such discrimination has been used for creation and innovations. But in case of developing countries, the racial, cultural, ethnic and religious differences have often sabotaged the developmental efforts. As a result, they remained backward.

Relevant Articles:

Introduction to Developing/Underdeveloped/Less Developed/Third World Countries
Structure of Developing Countries
Common Characteristics of Developing/Third World Countries
Problems/Obstacles in the Way of Economic Growth

Principles and Theories of Micro Economics
Definition and Explanation of Economics
Theory of Consumer Behavior
Indifference Curve Analysis of Consumer's Equilibrium
Theory of Demand
Theory of Supply
Elasticity of Demand
Elasticity of Supply
Equilibrium of Demand and Supply
Economic Resources
Scale of Production
Laws of Returns
Production Function
Cost Analysis
Various Revenue Concepts
Price and output Determination Under Perfect Competition
Price and Output Determination Under Monopoly
Price and Output Determination Under Monopolistic/Imperfect Competition
Theory of Factor Pricing OR Theory of Distribution
Principles and Theories of Macro Economics
National Income and Its Measurement
Principles of Public Finance
Public Revenue and Taxation
National Debt and Income Determination
Fiscal Policy
Determinants of the Level of National Income and Employment
Determination of National Income
Theories of Employment
Theory of International Trade
Balance of Payments
Commercial Policy
Development and Planning Economics
Introduction to Development Economics
Features of Developing Countries
Economic Development and Economic Growth
Theories of Under Development
Theories of Economic Growth
Agriculture and Economic Development
Monetary Economics and Public Finance

History of Money

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