Economic Development Factors and Underdevelopment Traits

Foundations of Economic Development

Productivity Enhancements

Productivity is the quantity of goods and services that each unit of productive factor can generate. If it grows, it increases the country's production. It depends on productive capital, human capital, natural resources, and technological expertise.

Savings and Investment

Encouraging savings allows a portion of income to be invested, accelerating economic growth. If domestic savings are not generated, foreign investment can be utilized.

Education and Training

Investment in human capital produces positive synergies. Human capital is considered a decisive factor in raising productivity and fostering economic growth.

Free Trade

Removing trade barriers improves the possibility of free trade and economic growth by creating larger markets.

Population Control

Controlling population growth can distribute higher income among fewer citizens, leading to an increase in welfare.

Understanding Underdevelopment

Characteristics of Underdevelopment

• Imbalance Between Population and Resources: Due to rapid population growth, resources often become insufficient.
• Low Per Capita Income: The level of per capita income continuously declines due to slow production growth and rapid population increase. This creates a vicious cycle of poverty.
• Productive Sector Imbalance: The agricultural sector predominates (despite insufficient production), with a lack of industry and services (which, if they exist, are minimal). There is also a lack of productive capital, technology, and infrastructure to lay the foundations for economic growth.
• Dualism: There is an economic dualism where a late productive sector coexists with an advanced and modern one, and a social dualism where a rich minority coexists with a poor majority.
• High Foreign Dependence and Low World Trade Participation: Trade relations are often unequal. Underdeveloped countries export very few natural resources and import almost everything else. However, imports are very expensive, and tariff barriers prevent them from trading products cheaply. This often leads to external debt.