Difference between Developed and Underdeveloped Economy
Last Updated : 14 Jan, 2024
A developed economy means which have high per capita income and high level of wealth and resources available to its citizens. In such an economy there is a lower rate of poverty incidence, and industrial sectors are thriving. According to the United Nations HDI 2020 below are the top 5 developed countries:
- Norway
- Switzerland
- Ireland
- Hong Kong
- Iceland
Underdeveloped Economy
An underdeveloped economy means that have low per capita income, a high rate of unemployment, a high growth rate of the population, low rate of production and there is also a difference between the rich and the poor. According to the United Nations HDI 2020 below are the top 5 underdeveloped countries:
- Niger
- Central African Republic
- Chad
- Burundi
- South Sudan
Difference between Developed and Underdeveloped Economy:
| | | Underdeveloped Economies | Developed Economies |
| 1. | Main reason | A low per capita income. | A high per capita income. |
| 2. | Predominant sectors | Agricultural or the primary sector. | Industrial and service sectors. |
| 3. | Poverty | Poverty is existent widely. | The incidence of poverty is low. |
| 4. | Productivity | The productivity is low because resources are under utilized and traditional techniques are used in production. | The productivity is high because resources are properly utilized and highly advanced capital-intensive techniques are used in production. |
| 5. | Difference | The gap between the rich and the poor is wide. | The gap between the rich and the poor is narrow. |
| 6 | HDI (human development index) | Lowest HDI | Middle HDI |
Sample Questions
Question 1: What is the main key point to get recognized the economic development of any country.
Answer:
Per capita income is the main point for economic development of any country. It measures the amount of money that every individual earns in an economy.
Question 2: Why increased productivity and trades are good things for the economy of any country.
Answer:
Increase in productivity is good for the economy because it creates employment, helps individuals, earn more income, increases individual, increases GDP, increase in the value of labor which raises wages.
Question 3: What are the main characteristics of an underdeveloped economy?
Answer:
The main characteristics of an underdeveloped economy are the state of deprivation of large proportion of population, low per capita income, lowest HDI (human development index), economic inequalities, low productivity of labor and etc.
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