Tag: economics of development

An underdeveloped economy is characterised by state of deprivation of large proportion of population. Apart from that, other characteristics of an underdeveloped economy are low per capita income, a higher proportion of labour force involved in primary sector activities.

D. All of the above

a. High inequality of income and wealth is another common feature of underdeveloped countries. In these countries, large percentage of national income is shared by a small segment of the society while a large segment of the society gets barely enough to survive. Economic inequality exists even in developed countries but it is not as much as found in underdeveloped countries.

b. Rate of capital formation is very low in underdeveloped economies due to low income levels and high incidence of poverty.

c. The state in underdeveloped economy fails to provide acceptable levels of living to a large fraction of its population, thus resulting into misery and material deprivations. We need to note here that underdevelopment is a relative concept but it sustains absolute poverty. 

Population Growth: Population growth is one of the central problems of economic development. Some developing countries have population growth rates in excess of their GDP growth rates and therefore have negative growth rates of per capita GDP. Many developing countries have rates of population growth that are nearly as large as their rates of GDP growth. As a result, their standards of living are barely higher than they were 100 years ago

Cultural Barriers: Traditions and habitual ways of doing business vary among societies, and not all are equally conducive to economic growth. In developing countries, cultural forces are often a source of inefficiency. Sometimes personal considerations of family, past favors, or traditional friendship or enmity are more important than market incentives in motivating behavior.

Foreign Dept: Sharp increases in real interest led to increased debt-service payments and as a result, many countries could not make their payments. The lending banks had little choice but to reschedule the debt essentially lending the developing nations the money to make interest payments while adding to the principal of the existing loans. 

In economics, underdevelopment is when resources are not used to their full socio-economic potential. As a result  local or regional development is slower in most cases than it should be, especially compared with the investment and innovation in countries that surround it. The scarcity of capital, technological backwardness, and unemployment are generally found in underdeveloped countries.

Forecasting refers to predicting the imputed values of various economic variables like demand, supply etc. to develop premises for the economic plans for smooth conduct of production in the economy according to the plans that aims at achieving growth and development of the economy.  

The money spent on food is not a part of the opportunity cost of going on holiday.Opportunity cost of production of a commodity refers to the cost which has to be sacrificed in terms of the next best alternative which could be produced out of that cost. Therefore, food is part of our everyday expense which will not be considered as the sacrifice of any other commodity. 

Normative Statement refers to "What ought to be" or it makes an assessment of an activity and offers advice. Hence the statement made by Madhur is a normative statement.

Custom Duties are levied on exports and imports. Custom duty can also be defined as a type of tax which should be paid by people for exporting to foreign countries and importing goods from foreign countries.