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Underdeveloped Countries: Meaning and Classification of Definitions



  1. Meaning of Underdeveloped Countries
  2. Classification of Definitions of Underdeveloped Countries

In this article we will discuss about Underdeveloped Countries. After reading this article you will learn about: 1. Meaning of Underdeveloped Countries 2. Classification of Definitions of Underdeveloped Countries.

Meaning of Underdeveloped Countries:

Eugene Staley defined an underdeveloped country as – “A country characterised by (i) mass poverty which is chronic and not the result of temporary misfortune and (ii) obsolete methods of production and social organisation, which means that the poverty is not due to poor natural resources and hence could presumably be lessened by methods already proved in other countries”.


This definition of underdevelopment is quite satisfactory. A group of experts of the United Nations states, “We have had some difficulty in interpreting the term ‘underdeveloped countries’. We use it to mean countries in which per capita real income is low when compared with the per capita real income of the United States of America, Canada, Australia and Western Europe. In this sense, an adequate synonym would be poor countries”.

The Planning Commission of India offered a definition of underdeveloped country as one “which is characterised by the co-existence, in greater or lesser degree, of unutilised or under-utilised manpower on the one hand and of the unexploited natural resources on the other”.

Prof. Jacob Viner is of the opinion that an underdeveloped country is “a country which has good potential prospects for using more capital or more labour or more available natural resources or all of these, to support its present population on higher level of living or if its per capita income level is already fairly high, to support a large population on a not lower level of living.”

Thus this definition emphasises that an underdeveloped country is having great potentiality of using more resources to provide higher level of living for the entire population of the country.


Prof. Ragner Nurkse was of the opinion that underdeveloped countries are those which “Compared with the advanced countries are under-equipped with capital in relation to their population and natural resources”.

According to Bauer and Yamey, “the term underdeveloped countries usually refer loosely to countries or regions with level of real income and capital per head of population which are low by standards of North America, Western Europe and Australia.”

Again, M.P. Todaro is of the opinion that “underdeveloped economy is that economy in which there are low levels of living, absolute poverty, low per capita income, low consumption levels, poor health services, high death rates, high birth rates and dependence on foreign countries.”

Similarly, Prof. Gunnar Myrdal observed, “An underdeveloped country is that country in which there is a constellations of numerous undesirable conditions of work and life; output, income and levels of living are low; many modes of production, attitude and behaviour patterns are disadvantageous, and there are unfavourable institutions. There is a general causal relationship among all these conditions.”


According to Simon Kuznets, “By underdeveloped countries, we mean countries that have been unable to utilise the opportunities afforded by modern material and social technology and have failed to supply minimum subsistence and material comfort to their population.”

Again Dr. Oscar Lange observed, “An underdeveloped economy is an economy in which the available stock of capital goods is not sufficient to employ the available labour force on the basis of modern techniques of production.”

Thus these definitions have underlined the proximate causes of underdevelopment as:

(i) Poor per capita income,

(ii) Capital deficiency,

(iii) Unutilised potential for growth,

(iv) Underutilised manpower and natural resources,

(v) Poor base in the socio-economic determinants of development,

(vi) Orthodox, inefficient and traditional techniques of production and


(vii) Poor human development index.

Thus it is found that to define the term underdeveloped country is an easy task. However, the term ‘underdevelopment’ represents ‘poverty of nations’ which has been changing considerably over time. Again, the countries were classified as poor and rich on the basis of per capita real income.

Again the poor countries which were initially termed as ‘backward’, but gradually they have been termed as ‘underdeveloped’, then to ‘less developed’ and then to ‘Third World Countries’ and developing countries.

Classification of Definitions of Underdeveloped Countries:

The aforesaid definitions of underdevelopment can be broadly classified into—


(i) Poverty and low income based,

(ii) Under-utilised resource based and

(iii) capital deficiency based.

While the definitions of Eugene Staley, Samuelson, Bauer and Yamey, Todaro, Gunnar Myrdal and United Nations are poverty and low income based, but the definitions of Jacob Viner and Planning Commission are under-utilised resources based. Again the definitions of Ragnar Nurkse, Simon Kuznets and Oscar Lange are capital deficiency based.


However, in recent years the economists like Amartya Sen, Jean Dreze etc. has defined the term under­development on the basis of poor human development index like, poor rate of literacy, high infant mortality rate, poor per capita consumption of electricity, poor level of social welfare, poor average calorie intake etc.

United Nations and World Bank Classification:

In recent times, the U.N. publications have been describing the underdeveloped countries as ‘developing economies’ which implies that the developmental process has been initiated in these economies. Thus, the U.N. publication has classified the world economies between ‘developed economies and underdeveloped economies’.

World Total GNI figures do not add upto the various components GNI is the same as GNP (Gross National Product) used earlier by World Bank.

Figures in brackets are percentage of the World totals in the respective columns.


Source: Compiled from World Development Report, World Bank (2007).

The World Development Report (2007) of the World Bank has classified the various countries of the world on the basis of its per capita Gross National Product (G.N.P.).

Accordingly, developing countries are classified into:

(a) Low income countries with per capita GNP of $ 875 and below in 2005 and

(b) Middle income countries with per capita GNP ranging between $ 876 and $ 10,725.

On the other hand, other countries which are mostly members of the Organisation for Economic Co-operation and Development (OECD) are placed in the group of high-income countries whose per capita GNP is higher than $ 10.725. Table 1.1 clarifies this classification.

Classification of Countries and Distribution of World Population

Table 1.1 reveals that in 2005, total population of low-income countries was 2,353 million which constitutes nearly 36.5 per cent of the total world population. But at the same lime, total GDP of these low income countries constitutes nearly 2.7 per cent of the total world GNI.

The middle income countries, which are little bit more developed than low income countries, give shelter to nearly 48.0 per cent of world population but at the same time its total production account for 16.5 per cent of world GNI.

Taking both these two groups in one fold which are commonly branded as ‘developing or underdeveloped economies’, it may be found that these countries contain nearly 84.0 per cent of the world population but account for only 19 per cent of world GNI. Most of the countries of Africa, Asia, Latin America and a few countries of Europe can be included in this group.

On the other hand, high-income economies contain nearly 16 per cent of the world population but account for major portion, i.e., 79.0 per cent of world GNI. Thus majority of world population is facing worst economic hardship whereas a small percentage of population living in high-income economies is enjoying major share of the cake.

Table 1.1 further reveals that India is among the poorest countries of the world which has given shelter to 17.0 per cent of the total world population with its share of only 1.8 per cent of world GNI. In 2005, the per capita GNI of India stood at $ 720 as against $ 2640 for middle-income economies, $ 35,131 for high-income economies and $ 6,987 for the whole world.

From these above analysis of U.N. and World Bank classification of developing and developed economies, we can observe the following points:

Firstly, there exists gross inequality in income between these rich and poor countries.

Secondly, the gap between the rich and poor countries in respect of their per capita income is gradually widening.

Thirdly, different countries within the group of high-income economies are not necessarily developed economies.

For example, Oil exporting high-income economies are maintaining high per capita income due to their export of oil at a very high price although they are not all developed economies.

Thus considering all the above mentioned definitions of underdeveloped countries we can find that:

(a) Underdeveloped economies are characterised by the prevalence of low per capita income;

(b) Prevalence of ‘mass poverty’ in the underdeveloped countries has resulted from low level of development;

(c) Mass poverty in these economies has also resulted from low resource base of the poor and

(d) Mass poverty in these economies has arisen from obsolete methods of production but not from poor natural resources and social exploitation.

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