Economic Underdevelopment: Meaning, Theories & Measure

Economic underdevelopment according to different authors

Different authors have given their definition, among them are:

Oswaldo Sunkel. It’s the complex and interrelated set of phenomena that are translated and expressed in flagrant inequalities of wealth and poverty, stagnation and backwardness with respect to other countries in production and in economic, cultural, political and technological dependence. (1)

Paul Samuelson. An underdeveloped nation is one whose real per capita income is low relative to the per capita income of nations such as Canada, the United States, and Western Europe. (2)

Maza Zavala. Underdeveloped countries are countries that grow without being able to get rid of the inability to socially absorb growth. (3)

Raymond Barre. “Underdeveloped economy is presented as a primary and dual economy characterized by instability and dependency that can hardly break the circle of poverty.” (4)

Rostow. He defines it as a stage or instance of a concrete historical process where national societies evolve from backwardness to high cumulative progress. (5)

According to Rostow, development has five stages:

1. Traditional society.
2. Preconditions for change.
3. Take-off.
4. Drive to maturity.
5. Mass consumption.

Theories of economic underdevelopment

• Per capita income theory

A country is underdeveloped if it has a low per capita income, and is developed if its per capita income is high relative to the world average. It’s the most accepted theory among economists and experts in economic development.

• Dual economy theory

A country is underdeveloped if it has a dual economy, that is, the coexistence of economic sectors with radically different productivity and technification. For example, farmers using archaic techniques and, on the other hand, producers with advanced technology and production.

• Theory of the ability to exploit its natural resources

The level of development of a country is determined by the percentage of its exploited capacity in relation to its potential capacity. If it exploits a small percentage of its potential capacity, it’s underdeveloped and vice versa.

• Theory primary structures

Underdeveloped countries are those that have economies defined by primary structures and there is a predominance of the activities of the primary sector of the national economy, and the secondary and tertiary sectors are minimal. The majority of the population works in the primary sector, has low productivity, and wages are dismal.

• Instability theory 

A country is underdeveloped when economic activity suffers secular instability due to external variables that depend on foreign companies or nations and in whose decisions the national government is very weak.

Especially in decisions related to traditionalist agricultural production subject to the whims of nature, and also mining production and exports, it depends on the decisions of foreign companies that act according to their own interests.

• Dependency theory 

A country is underdeveloped when its national activity depends on economic, political, social, technological and social aspects, to a large degree, on industrial empires or foreign governments.

• Vicious circle theory of poverty

A country is underdeveloped when the vicious circle of poverty occurs: