Question

Difference b/w development and underdevelopment

Answer 1

Economic difference between developed and underdeveloped economies

Economic difference between developed and underdeveloped economies:

Features of underdeveloped countries:

Low human capital, meaning the labor force has poor skills, leading to lower labor productivity.

Poor social infrastructure like roads, bridges, dams etc. which restrict the production of goods and services, as well as limiting the growth of markets to sell these goods.

This leads to lower labor mobility, and thus productivity.

The financial infrastructure (banks, financial institutions etc.) are not well developed, and in most cases are in its infancy.

The banking sector is primitive.

Electronic transactions are either non existent or very limited in use.

Educational institutions are few and far between.

Labor training institutions are also few in numbers, and thus the population cannot learn the modern economic techniques of production and distribution of goods and services.

The political systems are generally not very stable, and in many cases are military dictatorships or poorly run command economies.
Democracy is generally not practiced in these underdeveloped economies.

Thus there is a perpetual haze of political, social, cultural and economic uncertainty.

This is a major impediment to growth and development.

It leads to low domestic savings and reinvestment (no one wants to invest in an unstable environment) and foreign investment for the same reason is either non existent or very low.

Research and development in modern technology is either non existent or at a very elementary level.

Their exports are generally primary goods like agricultural goods and other raw materials.

These goods have a high weight to price ratio and thus earn very little money.