An "underdeveloped country" is a country characterized by widespread chronic poverty and less economic development than other nations. "Underdeveloped country" is an unofficial term, but countries that would qualify as underdeveloped are generally classified as developing countries or least-developed countries (LDCs) by the United Nations, which lists 46 nations as least-developed as of 2021 (full list below). Underdeveloped countries are alternately called low-income countries (a term growing in popularity) by World Bank and called emerging markets, newly industrialized countries, or members of the "Global South" by various other organizations.
Underdeveloped countries and the Human Development Index (HDI)
One common method used to categorize the development of a country is the United Nations' Human Development Index (HDI). The Human Development Index evaluates each country's human development by tracking indicators such as life expectancy, education, and per capita income. Human Development Index ranks countries on a scale from 0-1, from least developed to most developed. There are four tiers: low human development (0-.55), medium human development (.55-.70), high human development (.70-80), and very high human development (.80-1.0).
Top 10 Most Underdeveloped Countries in the World (United Nations HDI 2020)
Useful as HDI is as a predictor, it is worth noting that a low HDI does not guarantee that a country will appear on the list of least-developed countries, and a relatively high HDI does not guarantee a country will not be classified as an LDC. For example, Nigeria does not make the list despite its HDI of 0.539, but Bangladesh is on the LDC list with an HDI of 0.632. This is because the least-developed list is based upon a similar, but different set of criteria than HDI, so some variances exist between the two lists. In the case of Nigeria, its income may not be the most efficient, but it is large enough to not be at risk, so the country is not considered least-developed.
Characteristics of underdeveloped countries
Underdeveloped countries have very low per capita income, and many residents live in very poor conditions with little access to education or health care. Additionally, underdeveloped countries tend to rely upon obsolete methods of production and social organization. These nations often experience high birth rates and population growth, which strains their infrastructure and supply chains, further contributing to their widespread poverty. In fact, these seven common economic traits appear in most every underdeveloped country:
- Low income per capita and widespread poverty—The citizens of underdeveloped countries tend to make very little money. For example, the United States per capita GNP in 2006 was $44,970 (US$). The average for low-income countries was $650 (US), less than 1.4% that of the U.S.
- Lack of capital, both public and private—Not only do very few citizens of underdeveloped countries own lumberyards, factories, and other businesses, the government is nearly as impoverished and lacks funds to properly build and support roads, railways, schools, hospitals, and so on.
- Population explosion—In most underdeveloped countries, the birth rate far exceeds the death rate, leading to excessive population growth. If the growth happens too quickly, systems such as infrastructure, food supplies, and social services may fail to keep pace.
- Excessive unemployment—One of the most impactful results of disproportionate population growth is skyrocketing unemployment, caused by a slow-growing job market matched with a quickly expanding population.
- Predominance of Agriculture—Agriculture still makes up 40-50% of national income in most underdeveloped economies, as opposed to 2-8% in developed economies.
- Small and unproductive investments—Both the citizens and the governments in underdeveloped countries have little extra income to save or invest, and the little they do have if often invested in ways that do not lead to national growth (physical treasures rather than business investments, for example).
- Diminished productivity—In underdeveloped countries, the land, labor, and capital all tend to produce less than in developed countries. Labor (workers) are undereducated, underfed, and have poor medical care. Existing resources tend to be managed less well or with less-technological solutions.
United Nations and World Bank efforts to assist underdeveloped countries:
The United Nations (UN) holds a conference approximately every ten years on the subject of the world's underdeveloped countries. During the meeting in 2011, the UN set a goal to graduate 50% of the current underdeveloped countries to a higher economic status by 2022. The World Trade Organization (WTO) has created an Integrated Framework of Action to integrate these countries into the global economy by assisting with trade and market access with the hopes of encouraging economic growth and development. The hope is that these countries can grow and become developed countries with well-developed economies and a high level of technological advancement. In fact, multiple countries have "graduated" from the United Nations' LDC list over the years, and five more are scheduled to join them soon.
Countries that have graduated from the United Nations' Least Developed Countries (LDCs) list:
- Sikkim - 1975 (became part of India)
- Botswana - 1994
- Cabo Verde/Cape Verde - 2007
- Maldives - 2011
- Samoa - 2014
- Equatorial Guinea - 2017
- Vanuatu - 2020