Characteristics of Developing Economies

Even though developing nations have very different backgrounds in terms of resources, history, demography, religion and politics, they still share a few common characteristics. Today, we will go over six common characteristics of developing economies.

characteristics of developing economies

Common Characteristics of Developing Economies

1. Low per capita real income

This is one of the most defining characteristics of developing economies. They suffer from low per capita real income level, which results in low savings and low investments. It means the average person doesn’t earn enough money to invest or save money. They spend whatever they make. Thus, it creates a cycle of poverty that most of the population struggles to escape from. The percentage of people in absolute poverty (the minimum income level) is high in developing countries.

2. High population growth rate/size

Another common characteristic of developing countries is that they either have high population growth rates or large populations. Often, this is because of lack of family planning options, lack of sex education and the belief that more children could result in a higher labor force for the family to earn income from. This increase in recent decades could be because of higher birth rates and reduced death rates through improved health care.

3. High rates of unemployment

In rural areas, unemployment suffers for large seasonal variations. However, unemployment is more complex problem requiring policies beyond traditional fixes.

4. Dependence on primary sector

Almost 75% of the population of low-income countries is rurally based. As income levels rise, the structure of demand changes, which leads to a rise in the manufacturing sector and then the services sector.

5. Dependence on exports of primary commodities

Since a significant portion of output originates from the primary sector, a large portion of exports is also from the primary sector. For example: Copper accounts for two-thirds of Zambia’s exports.

Common Characteristics of Developing Economies


© 2017 Intelligent Economist. All rights reserved.