Dualism is a major characteristic of an under developed economy, Dualism refers to that condition of a country when two sectors (i.e., advanced or Modern sector and the backward or traditional sector) exist side by side. For instance, we have modern industries and the old cottage industries working side by side as well as modem fanning and medieval farming being practised at the same time, In other words, in an underdeveloped country, there is the bullock-cart economy and modern transport operating at the S,UIlC time, Usually, modcruisation is confined to the trade sector mainly organised managed and financed by the foreign capitalist. Along with this advanced sector, there is a very large indigenous sector following traditional modes of production and distribution.I, Bright Singh, D.-EcIJllolllic.r (If Development, to Quotes by Stephen Erke in Economic fur elopment.



From the above discussing, it is obvious that defining an under-developed by no means a simple task. In current discussion, all low-income countries arc generally classified as under-developed. In general, all those countries with per capital income less than 25 per cent of the United States level or roughly less than $500 per year are included among under- developed countries. There is also a broad agreement among economists that low-income levels are largely associated with deficiency of capital.

of accumulation, because of the tendency to emulate the higher levels of consumption prevailing in the advanced countries. Nurse has called this tendency it is usually raucous through media like, or through foreign visits. Gucci Sully. there exists a marked inequality in the distribution of incomes in under- developed countries. This should have resulted in a greater volume of savings available for capital formation. But most- to the sector in which the greatest concentration of income lies is the one which derives its income primarily from non-entrepreneurial sources, such as unearned rent and interest. The attitudes and social values of this sector arc often such that it is prone to use its income for “conspicuous consumption,’ investment in land and real estate, speculative transactions. inventory accumulation and hoarding of gold and jewellery, If these surpluses well channeled into productive investment, they would lend to increase substantially the level of capital fibrillation.

As the capitalist sector, either private or State. constitutes a very small part of the economy of an under- developed country, industrial profits constitute a much smaller proportion of its national income as compared with that is advanced countries, where they constitute a considerable proportion of the national income. It was the increasing volume of profits arising in the private capitalist sector in England in the 19th century and in recent times in the State capitalist sector in the U.S.S.R. that played an important pan in the accumulation of capital in these countries. (ii) Ethics Agriculture. Most under-developed countries are predominantly agricultural. A great majority of population, usually between 70 and 80 per cent, are engaged in agriculture and allied occupations. whereas in the developed countries 15 per cent or even less draw their sustenance from agriculture. This excessive dependence on agriculture is due to the fact that non-agricultural occupations have not grown at a rate commensurate with the ill crease in population owing to lack of sufficient investment outside agriculture. Hence, it growing labor force has had to be absorbed in agriculture. With the accelerated growth of population ill the last few decades, the pressure of population on the available land has become velly great and ha~ produced serious consequences, The labor-land ratio being high, agricultural holdings have become subdivided into small plots. which do not permit the use of modern mechanic methods of production.

Under-developed countries produce relatively large proportion of their national income, in the agricultural sector. However, the share of agriculture in thc national income is considerably smaller than its share in the total employment in the economy, reflecting low productivity per man in the agricultural sector. Fur instance. in India, while agriculture accounts for about 50 per cent of the lutal national income, it employccs no less than 70 pcr ccnt of the country’s total population. Thus, though under-developed countries are predominantly agricultural. thcy arc nevertheless much less efficient ill agriculture than arc the industrial countries. As Proof J.K. Galbraith has put it. “a purely agricultural country is likely to be unprogressive even ill its agriculture.” Prof. Gunnar Myrdal cxpl.ans this paradox thus: “Industrialization creates technology which can then be applied to agriculture, but not vice versa.” Too much concentration on land and too Iowa ratio of capital per worker explains the low productivity per worker in the agrarian sector. Harvey Leibenstein observes: “As long as industrial capital remains relatively scarce and as long as the vast majority of the labour force is engaged in agriculture. it would appear Lobe reasonably safe to postulate that. under these circumstances and at least for the early stages of development, the system is operating under diminishing returns with respect to Labour.'” (iii) Inequalities oF Income and Wealth, Another distinguishing characteristic of the under-developed economies is the disparities in income and wealth enjoyed by the rich ami poor sections of society. The lower national income of the economically backward countries is more in- equitably distributed than in the advanced countries. According to Colin Clark’s estimates, labour’s share of net income in the rich countries, like the U.S.A .• the U.K. Canada, Australia, New Zeal and and Switzerland was more than 70 per cent in 19~0, while in Chile and Mexico it was below 60 per cent. 7 According to a recent estimate the share of wages and income of self-employed persons in India is 24 per cent of the total national income.

In the under-developed countries. unearned income of landowners in the form of rent forms a very higher proportion as compared with the developed countries. But owing to a decline in the share of property income. there is tendency for the share of the incomes of the richest group in advanced countries to go down. On the other hand, the share of wages is gone up. Although. in the under-developed countries. there is concentration of incomes in a few hands. yet in absolute terms such incomes are too small to meet the requirements of the economy. Besides, such incomes arc usually diverted to non-economic investment such as jewellery and real estate or they are dissipated in unproductive social expenditure, e.g on marriages and are. therefore, not available to finance economic development. (iv) Dualistic Economy. The under-developed countries present sharp contrast in all walks of 6. Leibenstein, Harvey-Economic Backwardness and Economic Growth, 1950. p. 56. Clark, Colin. Condition of Economic Progress, 1957. pp. 61S-619. Mukherjee, M., Papers on National lnc tnt and life. There is the old and new, developed and underdeveloped, the educated and the illiterate. the rich and poor existing side by side, It is both a bullock cart and motor car economy. There arc pockets of extra rich and ultra modern people and vast masses steeped in abject poverty, There are efficient modem industries and the languishing indigenous handicrafts, and so on.

(v) Lack oC Entrepreneurial Ability and Skilled Technicians. In the under-developed countries generally, thcre arc very few people. who can be described as daring and dynamic entrepreneurs. There is also woeful lack of technical know-how square Infrastructure. The under-developed countries are also  charaetcrised by the lack of sufficient economic and social overheads. The means of transport and communication. irrigation and power. the banking system. the educational and medical facilities arc all imperfectly developed and they are utterly inadequate to serve the existing population. (v;i) Furcian Trade Orientation. An under-developed economy is generally foreign trade-oriented. Traditionally under- developed countries have exported raw materials and imported consumer goods and machinery. TIle ratio of export production to total output is normally high. Indeed. some of the countries like Ceylon, Malaya. Burma and Thailand can be called export economles in so far as a significant part of the national output of these countries is exported. In some countries like Chile. Egypt and Cuba. the export of only one or two staple commodities accounts for a major part of their foreign exchange earnings.

This excessive dependence on exports has certainly detrimental consequences for an under-developed economy. Firstly. the economy becomes biased towards production for exports to the comparative neglect of the other sectors of the economy. Secondly, the economy becomes unstable owing to frequent changes in foreign exchange earnings caused by fluctuations in the international prices of tIle export commodities. That is, the national income of these countries is highly susceptible to fluctuations resulting from varying trends in the foreign markets for their products. Thirdly, it is pointed out that of late there has been going on a secular deterioration in the terms of trade of primary producing countries, so that the richer developed countries are benefiting at the expense of the poor under-developed countries. World Populalion distribution-UDCs have a larger share In world population as well as unemployment. _Fourthly. the export-orientation of such economics has stepped up thcir marginal prospensity to import. (vi~i) Rapid Population Growth and Dtsgutscd Unemployment. The diversity among under-developed economics is perhaps nowhere so much in evidence as in respect of the facts of their population as regards its size, density and growth. While we have examples-of India and China with their teeming millions and galloping rates of growth, there are the Latin American countries which are very sparsely populated and whose total population in some cases numbers less than the single metropolitan cities in India and China. In several newly emerging countries of Africa too, and in some of the Middle Eastern countries, the size;f their population cannot be regarded as excessive considering their large expanse. The South-east and Eastern Asia, on the other hand, have swarming populations. However, there appears to be a common feature, namely, a rapid rate of population Increase. This rate has been rising still more in recent years, thanks to the advances in medical sciences which have greatly reduced the mortality due to epidemics and diseases. While the death-rate has thus fallen phenomenally, birth-rate docs not yet show any significant decline, so that the natural survival rates has become much larger. In countries like India, Pakistan and Burma, a veritable population-explosion is feared. The great relevance of this important trend COIIsists in this that it sets at ought all attempts at devcl- larger unemployment. opment in as much as the increased output is swallowed up by the increased population. One important consequence of this rapid of population growth is that it throws more and more people on land to eke out their living from agriculture, since alternative occupations do not simultaneously develop and thus are not there to absorb the increasing numbers seeking gainful employment. The resultant pressure of population on land thus gives rise to what has been called “disguised unemployment.” Low 21% land-labour and capital-labour ratios must result in under-employment and disguised unemployment in agriculture. It means that there are more persons engaged in agriculture than are actually needed, so that the addition of such persons does not add to land’s productivity; or putting it alternatively, given the technique and organisation, even if some of the persons are withdrawn from land. no fall in production will follow from such withdrawal. (i..r) Under-utilisation of Natural Resources. The natural resources in an under-developed economy are either unutilised or under-utiliscd. Generally speaking. under-developed countries are not deficient in land, water, minerals. forest or power resources though they be untapped. In other words, these constitute only potential resources. The main problem in their case is that such resources have not heel! fu Ily and properly utilised due to various difficulties, such as their inaccessibility, shortage of capital, primitive techniqu -s, and the small size of the market. This means that they have the potentialities for development but the level and character of their economic performance is too poor to take them forward. (x) Economic Awkwardness IC People. The people in under-developed countries arc economically backward, thal is, the quality of the people as productive agents is low. Instead of acquiring the greatest possible control over their physical environment, the people have struck a balance with nature at an elementary level. They have been relatively unsuccessful in solving the economic problem of man’s conquest of his material environment. Particular manifestations of this arc low labour efficiency, factor immobility, limited specialization in occupations and in trades, and a luck of entrepreneurship. economic ignorance, and a value structure atJd social structure that minimize the incentives of economic change. (xi) I’oor Consumptlon Patteru. The low level of earnings in the under-developed countries is re fleeted in their low level of living. The bulk (nearly 60 per cent) of their income is spent on necessaries of life, particularly food consisting mostly of cereals and devoid of nourishing items like fruits, meat, eggs, milk, etr, They 3r’Ctoo poor to afford comforts and I~xuries. The proportion of expenditure on housing and clothing is also very small. General poverty is also reflected in the very low standard of consumption of industrial goods and services (xi;) Peculiar raphy and Sudal Char- There arc certain demographic and social characteristics typical of the under- developed countries, Leaving a few pre under- populated and under-developed countries, the density of popu- isolation is very high considering the resources and employment opportunities available. There is a very high proportion 01″ the population in the! age-group-15 and a lower propor- tion in the working group 20-60 cxiorycars. Average expectation of life strikis low and infant mortality is very high.

Suu Iug up. The characteristics of underdeveloped countries have been comprehensively surn marisco thus: “Low aggregate and per capita impossibly comes, limited availability of lund patrol and capital resources per head; hence low productivity of labour which explains the low earning of workers the meagreness of savings and capital formation; the dependence of the major part of the population (In agriculture and the extractive industries for earning a living, poor yield of agriculture per capita as well as per unit of land; great disparity in the distribution income and wealth, concentration of large rental incomes in the hands of a few property owners; low levels of consumption expenditure and predominance the outlay on food items: very unsatisfactory housing conditions and negligible spending on the ordinary comforts of life; great density of population and high rates of growth: high infant mortality rate, uneconomic distribution of population in the different age groups. heavy dependency load, concentration of population in urban centers: law standards of literacy, inadequate medical facilities, poor health standards and short expectation of life-all these are the Common economic and social characteristics of the poor A very apt and easily understandable description of an under-developed country is given b Paul Hoffman thus: “Every one knows an under-developed country when he sees one, It is a country characterised by poverty, with beggars ill the cities and villages eking out a bare subsistence in the rural areas. It is a  country lacking in factories of its usually with inadequate power and light It usually has insufficient roads and rail-roads. insufficient government services, poor communications, It has few hospitals and few institutions of higher learning, Most of its people cannot read and write. In spite of the generally pre under- vailing poverty of the people, it may have isolation looted islands of wealth with a few persons living. Its banking system is poor, mall loans have to he obtained from money-lenders who arc little better than carryovers Zionists, Among the strike is ING characteristics of an under-developed country is that its exports to other countries usually consist almost entirely of raw materials, curs or fruits or sonic stap product wu and possibly a small admixture of luxury handicrafts.

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