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Exercises · Q9

Q.Define a developing economy. State any three characteristics of a developing economy.

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A developing economy is one that is still undergoing the structural transformation from a low-income, agriculture-dominated economy toward a modern, diversified, higher-income economy — as distinguished from a developed economy, which has substantially completed this transformation and typically shows high per-capita income, advanced technology spread widely across sectors, and a services-dominated, high-productivity structure.

Three characteristics of a developing economy, applicable to India:

  1. Low per-capita income relative to developed economies, even where the country's total national income is large.
  2. Heavy dependence on agriculture for employment, even as agriculture's share of total output steadily declines relative to industry and services.
  3. Disguised unemployment and underemployment, especially in agriculture, where more workers are engaged than the land genuinely requires, so removing some workers would not reduce total output. …

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