Development economics

Development economics is an important branch of economics which considers specific problems of Third World countries. These countries are given a variety of different names such as “underdeveloped countries”, “less developed countries” (LDCs), and “developing countries” (DCs). All these terms contrast third world countries with first world countries which are called “developed” or “industrialized”. Economies of Western Europe, North America, and Japan belong to this type.

The growth of Third World countries was especially great in the 1950s and 1960s. Most of these countries were a part of the colonial system and they were controlled by Western Europe. Many countries got political independence after World War II, but they have not become independent economically yet. For example, India has been an independent country since 1945.

The most advanced Asian and South American countries are sometimes called "newly industrialized countries" (NICs). Hong Kong, Taiwan, Singapore, South Korea have reached a great success in the development of their light manufacturing industries recently. They have already greatly increased the exports of such goods as shoes, clothes, and electronics all over the world. Brazil and Mexico have also increased their share in the world market mainly by means of foodstuffs exports.

It is important to understand that Third World countries are not uniform. Each country has its economic problems, and it is necessary for each country to develop its own policy in order to make progress.

However, developing countries are distinguished from developed nations by the following common characteristics: lower average income per capita¹; low labour productivity; low level of education; high mortality rate²; fast population growth; low living standards, etc. Some developing countries have all of these characteristics; others have only some of them.