Causes Responsible For Economic Backwardness of Under Developed Countries:

(i) Capital Deficiency:

Capital is of crucial importance for economic growth, but this is what the under-developed countries lack.

With the low level of national output much saving is not possible but whatever there is, it is frittered away in conspicuous consumption and extravagance in social ceremon­ies or is invested in real estate or jewellery.

Lack of sufficient capital handicaps all productive enterprise and inhibits economic growth. Such countries are caught up in a vicious circle of poverty explained below.

(ii) Lack of Entrepreneurial and Managerial Talent:


It is the bold and prudent entrepreneur and a wise manager who makes success of a business enterprise. Lack of this talent is responsible for missing available opportunities of profitable investment. Hence such countries remain economically backward.

(iii) Lack of Skilled Personnel and Technical Know-how:

Another very important bottleneck in the way of economic growth is the scarcity of technical know-how and skilled personnel. These elements of productive power take long in building up and foreign technicians are very costly. Hence, the under­developed countries remain under-developed.

(iv) Limited Size of the Market:

The purchasing power of the people is very low on account of their proverbial poverty. Hence the productive enterprises are handicapped in the sale of goods. Only an expanding market can provide a fruitful field for profitable investment and result in economic development of the country.

(v) Weak Infrastructure:

The backward countries lack an adequate and efficient means of transport and communications, a well-organised and deve­loped banking system and adequate facilities for technical education. Without these no country can develop economically. Lack of adequate infrastructure is a big abstracted to economic growth.

(vi) Social and Institutional Set-up:


Social customs and attitudes of the people of backward countries are a great bar to economic progress. Conserva­tism, superstition, lack of ambition, undue regard for custom and status are a drag on economic progress. Economic backwardness in India is in no small measure due to joint family system, caste system, peculiar laws of inheritance and the other-worldly attitude of the people.

(vii) Alien Rule:

Most of these countries have been under foreign rule which has kept them down. The foreign rulers could not be expected to take any genuine interest in the economic regeneration of the people. Economic backwardness of India may be largely attributed to the policies followed by its British rulers.

(viii) Growing Population:

The explosive rate of population growth in the backward countries undoubtedly retards their economic growth. Whatever development fakes place is swallowed up by the rising tide of population. The fruits of development are hardly sufficient-to feed the torrent of babies.

(ix) Preponderance of Agriculture:

The bulk of the population is engaged in agriculture which is carried on in a primitive manner. Naturally the national income remains at a low level. Economic development cannot be brought about in the absence of rapid industrialization.