Under-development

Under-development refers to a condition in which a country or region experiences low levels of income, industrialisation, education, healthcare, and living standards compared to more advanced economies. It is characterised by structural weaknesses, economic dependency, and limited capacity to achieve sustained growth and social progress. Under-development is not merely an absence of development but a complex state arising from historical, social, and economic factors that keep nations trapped in cycles of poverty and inequality.
The concept gained prominence after the Second World War, as newly independent nations in Asia, Africa, and Latin America began to confront economic stagnation and the legacy of colonial exploitation. Economists and development theorists sought to explain why some nations progressed rapidly while others remained impoverished despite abundant natural resources.

Definition

Under-development can be defined as a persistent state of economic and social backwardness, in which productive capacities are underutilised, living conditions remain poor, and structural inequalities hinder progress. It represents a situation where a country’s potential for development is constrained by historical, institutional, and external factors.
According to development economists, such as Ragnar Nurkse and Paul Baran, under-development is often self-reinforcing, creating what is known as a “vicious circle of poverty”, where low income leads to low savings, low investment, and consequently, low productivity and output.

Characteristics of Under-development

Under-developed countries, often referred to as developing or low-income nations, share several common economic and social features:

1. Low Per Capita Income:
   • A large proportion of the population lives below the poverty line, with limited access to basic goods and services.
2. High Population Growth and Dependency Ratio:
   • Rapid population increase places pressure on resources, employment, and public services.
3. Dominance of Agriculture:
   • A major share of the workforce is employed in low-productivity agriculture, often using traditional techniques.
4. Unemployment and Underemployment:
   • Labour is underutilised, and many people work in informal or subsistence activities.
5. Poor Infrastructure:
   • Inadequate transport, power, communication, and healthcare systems restrict economic efficiency.
6. Low Levels of Human Capital:
   • Limited access to education and healthcare reduces labour productivity and innovation.
7. Technological Backwardness:
   • Dependence on outdated production methods limits competitiveness.
8. Inequitable Income Distribution:
   • Wealth and income are concentrated among a small elite, creating social and economic inequality.
9. External Dependence:
   • Economies depend heavily on exports of primary commodities and imports of manufactured goods, exposing them to global price fluctuations.
10. Weak Institutional Frameworks:
    • Corruption, inefficient governance, and weak legal systems undermine economic performance.

Causes of Under-development

The roots of under-development are multidimensional, involving both internal and external factors.

1. Historical Factors

• Colonialism: Colonial powers extracted resources and shaped economies to serve external interests, leaving behind distorted structures.
• Slave trade and exploitation: Historical injustice disrupted traditional economies and weakened social institutions.

2. Economic Factors

• Low savings and investment: Limited capital formation due to low income perpetuates under-development.
• Dependence on primary commodities: Heavy reliance on exports such as coffee, cocoa, or minerals leads to vulnerability to price fluctuations.
• Balance of payments deficits: Persistent trade imbalances result in foreign debt accumulation.

3. Political and Institutional Factors

• Corruption and mismanagement: Weak governance undermines policy effectiveness.
• Political instability: Frequent regime changes deter investment and disrupt development plans.
• Inadequate policy framework: Lack of coherent long-term strategies slows progress.

4. Social and Cultural Factors

• Low literacy and health standards: Reduce productivity and limit participation in economic activities.
• Traditional attitudes: Resistance to innovation or gender inequality can restrict modernisation.

5. External Dependence

• Neocolonialism: Economic domination by developed countries through multinational corporations and trade relations.
• Unfavourable terms of trade: Declining prices of primary exports relative to manufactured imports worsen economic conditions.
• Debt dependence: High external borrowing and interest payments restrict domestic investment.

Theories Explaining Under-development

Economists and theorists have proposed various explanations for under-development, often contrasting structural and dependency-based perspectives.

1. Vicious Circle of Poverty (Ragnar Nurkse)

Nurkse argued that low income leads to low savings and investment, resulting in low productivity and continued poverty — a self-perpetuating cycle that under-developed nations struggle to break.

2. Structuralist Theory

Structuralists like Raúl Prebisch and Hans Singer emphasised the unequal structure of international trade, where developing countries export low-value goods while importing high-value manufactured products, leading to declining terms of trade.

3. Dependency Theory

Popularised by Andre Gunder Frank and Samir Amin, this theory views under-development as a result of the global capitalist system, where developed (core) nations exploit developing (peripheral) ones. Wealth flows from poor to rich nations through unequal exchange and control over resources.

4. Dual Economy Model (W. Arthur Lewis)

Lewis described under-developed economies as divided between a traditional subsistence sector (mainly agricultural) and a modern industrial sector. Development requires transferring surplus labour from agriculture to industry, raising productivity.

5. Big Push Theory (Paul Rosenstein-Rodan)

Suggests that coordinated large-scale investment is necessary to overcome economic stagnation. Individual industries alone cannot generate sufficient demand; only a collective effort can trigger self-sustaining growth.

6. Circular Causation (Gunnar Myrdal)

Myrdal proposed that development and under-development are self-reinforcing processes: progress breeds further progress, while stagnation perpetuates decline, creating cumulative inequality between nations.

Consequences of Under-development

• Persistent Poverty: A large proportion of the population remains in deprivation.
• Low Human Development: Poor education, healthcare, and nutrition reduce life expectancy and productivity.
• Social Inequality: Economic disparities foster political unrest and social instability.
• External Vulnerability: Dependence on foreign aid, capital, and technology reduces national autonomy.
• Brain Drain: Skilled workers migrate abroad for better opportunities, worsening domestic capacity shortages.

Remedies and Strategies for Overcoming Under-development

1. Human Capital Development:
   • Investment in education, skill development, and healthcare enhances productivity and innovation.
2. Industrialisation:
   • Encouraging manufacturing reduces reliance on primary commodities and diversifies the economy.
3. Infrastructure Expansion:
   • Improved transport, power, and communication systems boost efficiency and market integration.
4. Agricultural Modernisation:
   • Adoption of scientific methods, irrigation, and mechanisation increases productivity.
5. Capital Formation:
   • Encouraging savings and investment through financial reforms and foreign direct investment.
6. Institutional Reforms:
   • Strengthening governance, transparency, and legal frameworks to support efficient policymaking.
7. Trade Diversification:
   • Expanding export markets and promoting value-added goods.
8. Regional Cooperation:
   • Collaborating with neighbouring countries to enhance trade, infrastructure, and policy coordination.
9. Technological Advancement:
   • Investing in research, innovation, and digitalisation to improve competitiveness.
10. Reducing Inequality:
    • Implementing redistributive policies, land reforms, and social protection programmes.

Measurement of Under-development

Economists use several indicators to assess the level of under-development, including:

• Per Capita Income: Reflects the average income of citizens.
• Human Development Index (HDI): Combines life expectancy, education, and income levels.
• Poverty Rate: Percentage of the population living below the poverty line.
• Gini Coefficient: Measures income inequality.
• Infant Mortality and Literacy Rates: Indicators of health and education standards.

These measures collectively highlight disparities in living conditions and development outcomes.

Under-development in the Global Context

Under-development remains concentrated in parts of Sub-Saharan Africa, South Asia, and Latin America, though progress varies widely among countries. Globalisation and technological progress have provided opportunities for some developing economies to advance rapidly (e.g., South Korea, China, and Singapore), while others remain trapped in structural and institutional constraints.
Issues such as climate change, debt crises, and resource depletion now add new dimensions to the challenge of achieving sustainable and equitable development.