CHAPTER 4: CHAPTER QUESTIONS
1. What are some common characteristics of LDCs? Which of these characteristics are causes and
which accompaniments of underdevelopment?
Ans.: Causes: Low Level of National Income and Per Capita Income– The actual national and per
capita income levels are low, which limits the incentives for saving and investment. Due to the
lack of required investment, capital formation did not increase.
Causes: Low levels of Technology and Skills - Poor technology and low skills are the causes of low
production efficiency and underproduction, which leads to poverty among the public. Due to the
application of bad technology, the economic growth rate of these countries is very slow.
Causes: Rapid Population Growth - These countries have high natural population growth rates
due to their generally high birth rates and falling mortality rates. Moreover, due to the rapid
population growth, it has caused the dilemma of low living standards, and the average size of
holdings has decreased.
2. How might today’s LDCs differ from those of the 1950s?
Today, the economic and political systems of the least developed countries are more developed,
with the advancement of technology, higher literacy and enrollment rates, and more skilled
workers. In addition, inequality and discrimination are now discouraged.
3. How might a list of common characteristics of low-income countries vary from that of LDCs as a
whole?
As a whole, LDCs have better integrated economic and political structures, a higher percentage
of manufacturing and service production and labor force, more modern infrastructure, slower
population growth, higher rates of enrollment and literacy, more skilled workers, and higher
savings rates than low-income economies.
4. How do production and labor force shares in agriculture, industry, and services change as GNP
per capita increases? Have production and labor force proportions for low-and high-income
economies changed from 1977 (Figure 4-1) to the present?
5. What is a dual economy? Are all LDCs characterized by economic dualism?
Dual economy refers of two different types of economic sectors in an economy. For example,
within a country, there are two types of economies operating, one focusing on local demand and
the other focusing on global export markets.
Yes, most of them have the characteristics of economic dualism, one example is India.
6. Will the skill composition of the labor force change as rapidly in LDCs as it did in the past in DCs?
Yes, as the Least Developing Countries adopt the more advanced technology of the Developing
Countries, then it's is possible for the skill composition of the labor force to develop as rapidly in
LDC's as it did in the past in DCs.
7. What are the major characteristics of economic and political institutions in low income
economies?
Poorly Developed Economic and Political Institutions
Insufficient State Tax Collections and Provisions of Basis Services
8. What are the major institutional changes that take place with economic development? Are
these institutional changes causes or mere correlations of growth? Or is growth a cause of
institutional change?
If the institutional insufficiencies are absent in the country.