1

UNIT 3- General Characteristics and Structure have made the lives of the people more miserable.
of Developing Countries A large bulk of population of these countries lives
below the poverty line.
A. Classification of Developing Countries
The recent estimates reveal that about 35
According to:
per cent of India population (i.e. about 320 million
1. United Nations (UN) people) lives below the poverty line, that is, they
are unable to get even sufficient calories of food
-44 least developed, 88 developing nations, 13 needed for minimum subsistence, not to speak of
petroleum-rich members of the Organization of minimum clothing and housing facilities. The
Petroleum Exporting Countries (OPEC) situation in other developing countries is no better.
-145 countries constitute the Third World The poverty in the under-developed
2. Organization for Economic Cooperation and countries is due to stagnation or lack of economic
Development (OECD) growth in the past and their technological
backwardness, despite the vast resources existing
-61 low-income countries (LIC’s), 73 middle- there. By utilizing their natural resources and
income countries (MIC’s), 11 newly industrializing making progress in technology they can increase
countries (NIC’s), 13 member of OPEC their production and income and break the vicious
circle of poverty operating in them.
3. International Bank for Reconstruction and
Development (IBRD) It may however be noted that after the
Second World War and with getting political
-also known as “World Bank”
freedom from colonial rule, in a good number of the
-101 (low-income, middle-income, upper-middle- under-developed countries the process of growth
income), 24 high-income economies has been started and their gross domestic product
(GDP) and per capita income are increasing. That
✓ Low income economies are those with a is, why they are now called the developing
GNI per capita of USD 1,025 or less countries or less developed countries (LDCs) But
✓ Lower-middle-income economies are it will take a long time before they are able to catch
those with a GNI per capita of USD1026- up with the present-day developed countries.
4035
✓ Upper-middle-income economies are 2. Excessive Dependence on Agriculture:
those with a GNI per capita of USD 4036-
An under-developed country is generally
12475
predominantly agricultural. About 60 to 75% of
✓ High-income economies are those with
their population depends on agriculture and its
GNI per capita of USD 12,476 or more
allied activities for its livelihood. Further, about 30
B. Characteristics of Developing Economics to 50 percent of national income of these countries
is obtained from agriculture alone.
An idea of the characteristics of an
underdeveloped or a developing economy must This excessive dependence on agriculture
have been gathered from the above analysis of the is the result of low productivity and backwardness
definitions of an underdeveloped economy. of their agriculture and lack of modern industrial
Various developing countries differ a good deal growth. In the present-day developed countries,
from each other but even then there are some the modern industrial growth brought about
common features which are present in almost all structural transformation with the proportion of
the developing economies. working population engaged in agriculture falling
drastically and that employed in the modern
We explain below some of the basic and industrial and services sectors rising enormously.
important characteristics which are common to all This occurred due to the rapid growth of the
developing economies: modern sector on the one hand and tremendous
1. Low-Per Capita Income or Poverty: rise in productivity in agriculture on the other.

The first important feature of the In developing countries today, despite their
underdeveloped countries is their low per capita modern industrial growth in the last four decades
income. not much progress has been achieved towards
structural transformation in the occupational
It may however be noted that the extent of structure of their economies. Due to the use of
poverty prevailing in the developing countries is highly capital-intensive techniques in their
not fully reflected in the per capita income which is industries very few employment opportunities have
only an average income and also includes the been created in their industrial sector.
incomes of the rich also. Large inequalities in
income distribution prevailing in these economies
 2

When increasing population cannot obtain countries. This should have resulted in a greater
employment in the modern non-agricultural volume of savings available for capital formation.
occupations, such as industry, transport and other But most often the sector in which the greatest
services, then the people remain on land and concentration of incomes lies is the one which
agriculture and do some work which they are able derives its income primarily from non-
to get. entrepreneurial sources such as unearned
incomes of rents, interests and monopoly profits.
This has resulted in excessive dependence
on agriculture. During the last some decades The attitudes and social values of this sector are
because of population explosion the pressure of often such that it is prone to use its income for
manpower on land in the developing countries has ‘conspicuous consumption’, investment in land and
increased very much. Many bad results have real estate, speculative transactions, inventory
followed from this. With the increase in man-land accumulation and hoarding of gold and jewelry. If
ratio the land has been divided into small holdings. these surpluses are channeled into productive
investment, they would tend to increase
3. Lack of Capital and Low Rate of Capital
substantially the level of capital formation.
Formation:
4. Rapid Population Growth and Disguised
The insufficient amount of physical and human
Unemployment:
capital is so characteristic a feature in all
underveloped economies that they are often called The diversity among under-developed economies
simply ‘capital-poor’ economies. One indication of is perhaps nowhere to be seen so much in
the capital deficiency is the low amount of capital evidence as in respect of the facts of their
per head of population. population in respect of its size, density and growth.
While we have examples of India and Pakistan
Not only is the capital stock extremely small, but
with their teeming millions and galloping rates of
the current rate of capital formation is also very low.
population growth, there are the Latin American
In most under-developed countries investment is
countries which are very sparsely populated and
only 5% to 8% of the national income, whereas in
whose total population in some cases numbers
the United States, Canada, and Western Europe,
less than a single metropolitan city in India and
it is generally from 15 per cent to 30 per cent.
China.
The low level of capital formation in an under-
In several newly emerging countries of Africa too
developed country is due both to the weakness of
and in some of the Middle Eastern countries the
the inducement to invest and to the low propensity
size of their population cannot be regarded as
and capacity to save. The rate of saving in
excessive, considering their large expanse. The
developing countries is low primarily because of
South-East and Eastern Asia, on the other hand,
the low level of national income.
have large populations.
In such an economy, the low level of per capita
However, there appears to be a common measure,
income limits the size of the market demand for
namely, a rapid rate of population increase. This
manufacturing output which weakens the
rate has been rising still more in recent years,
inducement to invest. The low level of investment
thanks to the advances in medical sciences which
also arises as a result of the lack of dynamic
have greatly reduced the death rate due to
entrepreneurship which was regarded by
epidemics and diseases.
Schumpeter as the focal point in the process of
economic development. While the death rate has fallen sharply, birth rate
does not yet show any significant decline so that
At the root of capital deficiency is the shortage of
the natural survival rate has become much larger.
savings. The level of per capita income being quite
In countries like India, Pakistan, Burma, a veritable
low, most of it is spent on satisfying the bare
population explosion is feared. The great threat of
necessities of life, leaving a very little margin of
this important trend consists in this is that it sets at
income for capital accumulation.
bought all attempts at development inasmuch as
Even with an increase in the level of individual the increased output is swallowed up by the
incomes in an under-developed economy, there increased population.
does not usually follow a higher rate of
One important consequence of this rapid rate of
accumulation because of the tendency to copy the
population growth is that it throws more and more
higher levels of consumption prevailing in the
people on land and into informal sector to eke out
advanced countries. Nurkse has called this as
their living from agriculture, since alternative
“demonstration effect”. It is usually caused through
occupations do not simultaneously develop and
media like films, television or through foreign visits.
thus are not there to absorb the increasing
Generally, there exist large inequalities in the numbers seeking gainful employment.
distribution of incomes in under-developed
 3

The resultant pressure of population on land and traditional sector is drawn into a modern high
in informal sector thus gives rise to what has been productivity sector.
called “disguised unemployment”. Disguised
The concept of dualism was first of all introduced
unemployment means that there are more persons
into the development analysis by Dr. J.H. Boeke
engaged in agriculture than are actually needed so
but he emphasized the social dualism, according
that the addition of such persons does not add to
to which there is sharp contrast between the social
agricultural output, or putting it alternatively, given
systems characterizing the two broad sectors of
the technology and organization even if some of
the economy, one in which the original social
the persons are withdrawn from land, no fall in
system with its subsistence or pre-capitalist nature,
production will follow from such withdrawal. As a
limited wants, non-economic behavior and low
result, marginal productivity of a wide range of
level of economic and social welfare prevails, and
labour employed in agriculture is zero.
the other where imported capitalist system with its
Under-utilization of Natural Resources: modern system of industrial organization, wage
employment, unlimited wants and positive
The natural resources in an under-developed
behavior to economic incentives exists.
economy are either unutilized or underutilized.
Generally speaking, underdeveloped countries are However, it is technological dualism rather than
not deficient in land, water, mineral, forest or power Boeke’s social dualism which has an important
resources, though they may be untapped. In other bearing on the problem of economic growth and
words, they constitute only potential resources. surplus labour in the developing countries.
The main problem in their case is that such According to the concept of technological dualism,
resources have not been fully and properly utilized the important difference between the traditional
due to various difficulties such as shortage of and the modern sectors lies in the difference
capital, primitive technology and, the small size of between the production techniques or
the market. technologies used.
Economic Backwardness of the People: In the small modern sector consisting of large-
scale manufacturing and mining which provides
The people in under-developed countries are
wage employment, highly capital-intensive
economically backward, that is, the quality of the
techniques imported from the developed countries
people as productive agents is low. Instead of
are used. On the other hand, in the large traditional
acquiring the greatest possible control over their
sector covering agriculture, handicrafts and allied
physical environment, the people have struck a
activities, in which there exist extended family
balance with nature at an elementary level.
system and self-employment, labour-intensive
They have been relatively unsuccessful in solving technology is generally used.
the economic problem of man’s conquest of his
As a result of the difference in technologies used,
material environment. Particular manifestations of
the labor productivity and levels of earnings in the
this are low labour efficiency, factor immobility,
modem sector are much higher than those in the
limited specialization in occupations and in trades,
traditional sector. Moreover, since the technology
and a lack of entrepreneurship, illiteracy,
used in the modern sector is highly capital-
ignorance, and conservative social values that
intensive, the growth of this sector has not
minimize the incentives for economic change.
absorbed adequate amount of labour in high
5. Dualistic Structure of the Underdeveloped productivity and high wage employment.
Economies:
With the explosive rate of growth of population and
An important feature of developing economies, labour force and the limited creation of
especially those which are marked by surplus employment opportunities in the modem sectors
labour is that they have a dualistic structure. This because of the highly capital-intensive technology,
dualistic character of these economies has been surplus la-bour has emerged in the agriculture and
held to be the cause of unemployment and under- services. It has been possible for agriculture to
employment existing in them. contain the surplus labour because of the
prevalence of extended family system in which
Keeping in view this dualistic structure of less both work and income are shared by the family
developed economies, important models of members.
income and employment have been propounded.
Famous Lewis model of economic development We thus see that the problem of unemployment
with unlimited supplies of labour and Fei-Ranis and under-employment in less developed
model of “Development in a Labour Surplus economies has been intensified by the
Economy” explain how in dualistic economies, the technological dualism caused by the use, in the
unemployed and underemployed labour in the modem manufacturing and mining, of capital-
intensive technology imported from abroad which
 4

is wholly unsuitable to the factor endowments of hunger, illiteracy, sickness and forced to eke out a
these less developed economies with abundant life of extreme poverty.
labour and small capital.
Note that, according to the new view, economic
The unemployment and under-employment in development is needed mainly for two reasons:
these less developed economies are not only due
(1) The removal of poverty,
to the slow growth of capital or low rate of
investment, it is also due to the highly capital- (2) Enlargement of human capabilities and
intensive techniques used in the modem sector. freedoms.
This technological dualism with the fact that For the removal of poverty capabilities of the poor
modem sector has limited labour-absorptive should be enhanced so that they should be able to
capacity contains important implications for meet their minimum basic needs which include
development strategy to be framed for less getting adequate food, health, clothing and shelter.
developed countries like India with surplus labour. To achieve these economic growths is necessary
but not sufficient.
6. Need for Development:
Therefore, for removal of poverty, direct anti-
There is a very urgent need for economic
poverty measures such as generation of enough
development in the under-developed or poor
employment opportunities be taken. Secondly, as
countries. Economic development is needed so
emphasized by Amartya Sen, development is
that living standards of their people may be raised.
needed so that people should enjoy freedom and
What is more important is that economic
life of valued functioning. To quote Amartya Sen,
development of the poor countries is necessary
“The valued functioning may vary from elementary
from the point of view of the richer countries.
ones, such as being adequately nourished and
What do we find today? The world is divided into being free from avoidable diseases to very
two parts: one of the poor and the other rich which complex activities or personal states such as being
is continuously becoming richer. Such a situation able to take part in the life of community and having
threatens the economic and political stability of the self respect”. Thus, according to Amartya Sen,
world. Unless the poor countries are enabled to freedom of choice, or control of one’s own life are
share the general prosperity, their condition will central aspects of well-being for which true
become more and more difficult. development is needed.
It is the relative difference between the rich and Times are gone when people believed in their
poor countries which will make the poor countries destiny or kismet. They are no longer prepared to
contented or discontented. Ever-increasing reconcile to their poverty as resulting from fate.
discontent in the poor countries is bound, sooner They have now realized that the solution of the
or later, to aggravate the already explosive problem of poverty lies in economic development.
situation in the world.
This realization has been further strengthened by
As the gulf between the rich and poor countries the ever-increasing contacts and communications
widens, the tension in the world will grow. The poor between such countries and the developed
countries will agitate more and more for a share in countries. The awareness of the possibilities of
prosperity and, consequently, their demand on the development is growing every day. Already, the
richer countries will grow louder and louder in upper sections of society in developing countries
volume and intensity. are imitating the living standards prevalent in the
rich countries.
There is ample evidence in the world of the fact
that when nations cannot solve their domestic The desire for development has followed the
problems, their governments plunge them into war political freedom of the many poor countries from
with their neighbors who may be prosperous. It is foreign rule. It has now been realized that political
thus in the interest of world peace and harmony freedom without economic freedom and prosperity
that the poor countries are enabled to remove or has no meaning.
reduce their poverty.
Political independence has naturally raised
There is a growing and legitimate desire of the poor expectations of the people in the economic sphere.
nations to eradicate poverty. The desire to develop No wonder that people of these countries which
is keenly felt by different sections of their have won freedom from the colonial rule aspire to
population. Their desire to develop is natural and develop economically and that in the shortest
understandable because they experience acute possible time.
physical sufferings as a result of appallingly
Other Characteristics
miserable economic conditions in which they live.
The masses in the poor countries constantly face 1. Low income per head:
 5

People in developing countries are poorer on an Many poor countries have borrowed heavily in the
average, than those in developed economies. past. In some cases, a large proportion of the
However, this does not mean that all the people country’s income is taken up for repaying (and
are poor. In fact, some can be very rich. paying interest on) foreign loans. This means it
cannot be used to spend on education, health care
2. Low levels of saving due to low income:
and investment. So, the opportunity cost of
Poor people cannot afford to save and so the repaying debt may be economic development.
savings ratio (saving as a percentage of
10. Reliance on the export of primary products:
disposable income) of a country, where the
average income is low, is likely to be low. Over a period of time, the price of primary products
tends to fall, relative to the price of manufactured
3. Low life expectancy and high infant mortality
goods and services. This means that some poor
rate:
countries receive relatively less for their exports
Someone born in Japan can expect to live up to whilst having to pay more for their imports. Over
the age of 83 whereas someone born in Zimbabwe the last fifty years, a range of commodity prices,
has a life expectancy of 37 years only. including copper, coffee, cocoa and coal have
been falling.
4. Low levels of education and health care:
A number of primary product markets are
These tend to result in low levels of productivity. dominated by the consuming countries and these
5. Low levels of capital goods and poor developed countries use their buying power to
infrastructure: keep down the prices of primary products. There
have also been significant fluctuations in the price
These again reduce productivity. of some primary products due to climate changes
and natural resources.
6. Poor housing and sanitation:
11. Lack of investment in human capital and
A significant number of people may not have
capital goods:
access to clean water for drinking and washing.
Lack of expenditure on education, training and
7. Relatively high number of workers,
capital goods holds back- increases in productivity,
employed in the primary sector:
introduction of new technology and international
Underemployment can be high in agriculture. For competitiveness.
instance, ten persons may be doing the work of six.
12. Emigration of key workers:
This, again, lowers productivity.
Doctors, nurses, teachers, managers and other
8. Concentration on a narrow range of exports
key workers may seek better paid employment
(most of which are primary products):
abroad. Since 1999, for instance, more medical
Developing countries can be subject to, what is staff have emigrated from Ghana, than the country
known as, the has been able to train. Most of these have
emigrated to Canada, the UK and USA.
underdevelopment trap or the vicious circle of
poverty- This is the problem, that a country with low 13. Trade restrictions on their products:
incomes has a low saving rate. This means that
Tariffs, other restrictions and foreign government
most of their resources are used to produce
subsidies on their own products, make it difficult for
consumer goods. The lack of capital goods keeps
developing countries to sell their products at home
productivity and income low, as shown in Fig. 1.
and abroad, on equal terms.
The steepest tariffs tend to be imposed by
developed economies on those products, which
developing economies concentrate on, including
agricultural produce and labour-intensive
manufactured goods. These tariffs also build up as
the goods are processed into higher value-added
goods, so that developing economies are
discouraged from building up their industries.
14. Unbalanced economies:
Certain markets may be underdeveloped such as
the financial sector. A lack of a developed financial
9. High levels of international debt: sector is likely to discourage saving and
investment.
 6

C. The Structure of Third World Economies Netherlands, Germany, Portugal, and Spain. The
economic structures of these nations, as well as
Any portrayal of the structural diversity of
their educational and social institutions, have
developing nations requires an examination of
typically been modeled on those of their former
seven critical
colonial rulers. Countries like those in Africa that
components: only recently gained their independence are
therefore likely to be more concerned with
1. The size of the country (geographic area, consolidating and evolving their own national
population, and income) economic and political structures than with simply
2. Its historical and colonial background promoting rapid economic development. Their
policies (e.g., the rapid Africanization of former
3. Its endowments of physical and human colonial-held civil service jobs) may consequently
resources reflect a greater interest in these immediate
political issues.
4. The relative importance of its public and private
sectors Perhaps more important, the European colonial
powers had a dramatic and long-lasting impact on
5. The nature of its industrial structure
the economies and political and institutional
6. Its degree of dependence on external economic structures of their African and Asian colonies by
and political forces their introduction of three powerful and tradition-
shattering ideas: private property, personal
7. The distribution of power and the institutional taxation, and the requirement that taxes be paid in
and political structure within the nation money rather than in kind. As we will discover later,
Let us briefly consider each component, focusing these ideas combined to erode the autonomy of
on some similarities and differences among local communities and to expose their people to
countries in Africa, Asia, and Latin America. many new forms of potential exploitation.

1. Size and Income Level In Latin America, a longer history of political

independence plus a more shared colonial
Obviously, the sheer physical size of a country, the heritage (Spanish and Portuguese) has meant that
size of its population, and its level of national in spite of geographic and demographic diversity,
income per capita are important determinants of its the countries possess relatively similar economic,
economic potential and major factors social, and cultural institutions and face similar
differentiating one Third World nation from another. problems. In Asia, different colonial heritages and
Of the 145 developing countries that are full the diverse cultural traditions of the indigenous
members of the United Nations, 90 have fewer peoples have combined to create different
than 15 million people, 83 fewer than 5 million. institutional and social patterns in countries such
Large and populated nations like Brazil, India, as India (British), the Philippines (Spanish and
Egypt, and Nigeria exist side by side with small American), Vietnam (French), and Indonesia
countries like Paraguay, Nepal, Jordan, and Chad. (Dutch).
Large size usually presents advantages of diverse
resource endowment, large potential markets, and 3. Physical and Human Resources
a lesser dependence on foreign sources of A country's potential for economic growth is greatly
materials and products. But it also creates influenced by its endowments of physical
problems of administrative control, national resources (its land, minerals, and other raw
cohesion, and regional imbalances. As we shall materials) and human resources (both numbers of
see in Chapter 5, there is no necessary people and their level of skills).
relationship between a country's size, its level of
per capita national income, and the degree of The extreme case of favorable physical resource
equality or inequality in its distribution of that endowment is the Persian Gulf oil states. At the
income. other extreme are countries like Chad, Yemen,
Haiti, and Bangladesh, where endowments of raw
Even excluding the wealthy OPEC states, India, materials and minerals and even fertile land are
with a 1993 population of over 900 million, had a relatively minimal.
1990 per capita income level of $350, while nearby
Singapore, with fewer than 3 million people, had a In the realm of human resource endowments, not
1990 per capita income of over $12,300. only are sheer numbers of people and their skill
levels important, but so also are their cultural
2. Historical Background outlooks, attitudes toward work, and desire for self-
Most African and Asian nations were at one time improvement.
or another colonies of Western European countries, Moreover, the level of administrative skills will
primarily Britain and France but also Belgium, the often determine the ability of the public sector to
 7

alter the structure of production and the time it the principal economic activity in terms of the
takes for such structural alteration to occur. This occupational distribution of the labor force, if not in
involves the whole complex of interrelationships terms of proportionate contributions to the gross
between culture, of tradition, religion, and ethnic national product. Farming is not merely an
and tribal fragmentation or cohesion. Thus, the occupation but a way of life for most people in Asia,
nature and character of a country's human Africa, and Latin America. Nevertheless, there are
resources are important determinants of its great differences between the structure of agrarian
economic structure (see Chapter II), and these systems and patterns of land ownership in Latin
clearly differ from one region to the next. America and Africa. Asian agrarian systems are
somewhat closer to those Latin America in terms
4. Relative Importance of the Public and
of patterns of land ownership, but the similarities
Private Sectors
are lessened by substantial cultural differences.
Most Third World countries have mixed economic
It is in the relative importance of both the
systems, featuring both public and private
manufacturing and service sectors that we find the
ownership and use of resources. The division
widest variation among developing nations. Most
between the two and their relative importance are
Latin American countries, having a longer history
mostly a function of historical and political
of independence and, in general, higher levels of
circumstances. Thus, in general, Latin American
national income than African or Asian nations,
and Southeast Asian nations have larger private
possess more advanced industrial sectors. But in
sectors than South Asian and African nations. The
the 1970s and 1980s, countries like Taiwan, South
degree of foreign ownership in the private sector is
Korea, Hong Kong, and Singapore greatly
another important variable to consider when
accelerated the growth of their manufacturing
differentiating among LDCs. A large foreign-owned
output and are rapidly becoming industrialized
private sector usually creates economic and
states. In terms of sheer size, India has one of the
political opportunities as well as problems not
largest manufacturing sectors in the Third World,
found in countries where foreign investors are less
but this sector is nevertheless small in relation to
prevalent. Often countries like those in Africa with
the nation's enormous rural population. Table 2.2
severe shortages of skilled human resources have
provides information on the distribution of labor
tended to put greater emphasis on public-sector
force and gross domestic product (GDP) between
activities and state-run enterprises on the
agriculture and industry in 17 developing countries,
assumption that limited skilled manpower can be
the United States, and the United Kingdom. The
best used by coordinating rather than fragmenting
contrasts among the industrial structures of these
administrative and entrepreneurial activities.
countries is striking, especially in terms of the
The widespread economic failures and financial relative importance of agriculture.
difficulties of many of these public concerns in
In spite of common problems, therefore. Third
countries such as Ghana, Senegal, Kenya, and
World development strategies may vary from one
Tanzania raise questions, however, about the
country to the
validity of this assumption. As a result, these and
other African nations have moved in recent years next, depending on the nature, structure, and
toward less public and more private enterprise. degree of interdependence among its primary,
secondary, and tertiary industrial sectors. The
Economic policies, such as those designed to
primary sector consists of agriculture, forestry, and
promote more employment, will naturally be
fishing; the secondary, mostly of manufacturing;
different for countries with large public sectors and
and the tertiary, of commerce, finance, transport,
ones with sizable private sectors. In economies
and services.
dominated by the public sector, direct government
investment projects and large rural works 6. External Dependence: Economic, Political,
programs will take precedence, whereas in private- and Cultural
oriented economies, special tax allowances
The degree to which a country is dependent on
designed to induce private businesses to employ
foreign economic, social, and political forces is
more workers might be more common. Although
related to its size, resource endowment, and
the problem of widespread unemployment may be
political history. For most Third World countries,
similar, the solution can differ in countries with this dependence is substantial. In some cases, it
significant differences in the relative importance of touches almost every facet of life. Most small
the public and private sectors. nations are highly dependent on foreign trade with
the developed world. Almost all small nations are
5. Industrial Structure
dependent on the importation of foreign and often
The vast majority of developing countries are inappropriate technologies of production. This fact
agrarian in economic, social, and cultural outlook. alone exerts an extraordinary influence on the
Agriculture, both subsistence and commercial, is
 8

character of the growth process in these Video Clips:

dependent nations.
1. Characteristics of Developing Countries
But even beyond the strictly economic https://www.youtube.com/watch?v=MauZ
manifestations of dependence in the form of the wxPEF88
international transfer of goods and technologies is 2. Structural features of developed and
the international transmission of institutions (most underdeveloped countries
notably systems of education and governance), https://www.youtube.com/watch?v=gDtuK
values, patterns of consumption, and attitudes 9lMfsk
toward life, work, and self. Later chapters show 3. Why Some Countries Are Poor and Others
that this transmission phenomenon brings mixed Rich
blessings to most LDCs, especially to those with https://www.youtube.com/watch?v=tEe_Q
the greatest potential for self-reliance. A country's TNPffU
ability to chart its own economic and social destiny 4. Third World vs First World Countries -
is significantly affected by its degree of What's The Difference?
dependence on these and other external forces. https://www.youtube.com/watch?v=1yKvw
OydZFw
7. Political Structure, Power, and Interest
Groups
In the final analysis, it is often not the correctness
of economic policies alone that determines the
outcome of national approaches to critical
development problems. The political structure and
the vested interests and allegiances of ruling elites
(e.g., large landowners, urban industrialists,
bankers, foreign manufacturers, the military, trade
unionists) will typically determine what strategies
are possible and where the main roadblocks to
effective economic and social change may lie.
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 is
likely to differ from one country to the next.
Nevertheless—whatever the specific distribution of
power among the military, the industrialists, and
the large landowners of Latin America; the
politicians and high-level civil servants in Africa;
the oil sheiks and financial moguls of the Middle
East; or the landlords, moneylenders, and wealthy
industrialists of Asia—most developing countries
are ruled directly or indirectly by small and powerful
elites to a greater extent than the developed
nations are.
Effective social and economic change thus
requires either that the support of elite groups be
enlisted through persuasion or coercion or that the
elites be pushed aside by more powerful forces.
Either way, and this point will be repeated often
throughout this book, economic and social
development will often be impossible without
corresponding changes in the social, political, and
economic institutions of a nation (e.g., land tenure
systems, forms of governance, educational
structures, labor market relationships, property
rights, the distribution and control of physical and
financial assets, laws of taxation and inheritance,
and provision of credit).