Characteristics of A Developing/Underdeveloped Economy - SS3 Economics Lesson Note
A developing or underdeveloped economy typically exhibits the following characteristics:
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Low GDP per capita: The Gross Domestic Product (GDP) per capita, which measures the economic output per person, is relatively low in a developing economy compared to developed economies.
High poverty rates: Poverty is often prevalent in developing economies due to the low GDP per capita, high unemployment rates, and unequal distribution of income.
Dependence on primary industries: Developing economies often rely on the production and export of primary goods such as agriculture, mining, and forestry. This can lead to vulnerability to fluctuations in commodity prices and limited economic diversification.
Low levels of human capital: Human capital refers to the education, skills, and knowledge of a population. Developing economies often have lower levels of human capital due to limited access to education and training opportunities.
Limited infrastructure: Developing economies may lack basic infrastructure such as roads, electricity, and water supply systems, which can limit economic growth and development.
Limited access to capital: Access to capital is essential for economic growth, but developing economies often face constraints in accessing credit due to weak financial systems and a lack of collateral.
Political instability: Developing economies may face political instability due to factors such as corruption, weak institutions, and conflict, which can hinder economic growth and development.