Comparative status of Developing, Emerging and Developed Countries,Problems of Developing Countries.- For RAS RTS Mains exam of RPSC

Various problems of developing countries are as follows:-

  • The Uneven Pattern of Development:-The development gap has been widening for the very poorest countries.
  • Lack of Resources for developement
  • Inefficiency in resource use
  • Inadequate Skilled human resources
  • Stagnation in agricultural development
  • Population growth is one of the central problems of economic development. Some developing countries have population growth rates in excess of their GDP growth rates and therefore have negative growth rates of per capita GDP.
  • Cultural Barriers:- existing social, religious, or legal patterns may make growth more difficult
  • Domestic Saving:- is low and thus developing nations are trapped in vicious circle of poverty as resources cant be invested in new capital


Washington Consensus describes the conditions that are believed to be necessary for a poorer country to get itself on a path of sustained development. These views are accepted by a number of international agencies, including the World Bank, the IMF, and several UN organizations. The main elements of this consensus are as follows:

  1. Government should adopt sound fiscal policies that avoid large budget deficits. In particular, persistent structural (or cyclically adjusted) deficits should be avoided.
  2. Government should adopt sound monetary policies, with the goal of maintaining low and stable inflation rates. Exchange rates should be determined by market forces rather than being pegged by central banks.
  3. The tax base should be broad, and marginal tax rates should be moderate.
  4. Markets should be allowed to determine prices and the allocation of resources.
  5. Trade liberalization is desirable, and import licensing, with its potential for corruption, should be avoided.
  6. Targeted protection for specific industries and a moderate general tariff, say, 10 to 20 percent, may provide a bias toward widening the industrial base of a developing country. But such protection should be for a specified period that is not easily extended.
  7. Industrial development should rely to an important extent on local firms and on attracting FDI and subjecting it to a minimum of local restrictions that discriminate between local and foreign firms. (Of course, restrictions will be required for such things as environmental policies, but these should apply to all firms, whether foreignowned or locally owned.)
  8. An export orientation (as long as exports do not rely on permanent subsidies) provides competitive incentives for the building of skills and technologies geared to world markets, permits realization of scale economies, and provides access to valuable information flows from buyers and competitors in advanced countries.
  9. Education, health (especially for the disadvantaged), and infrastructure investment are desirable forms of public expenditure. Because future demands are hard to predict and subject to rapid change, a balance must be struck between training for specific skills and training for generalized and adaptive abilities.
  10. Finally, emphasis needs to be placed on poverty reduction for at least two reasons. First, poverty can exert powerful antigrowth effects. People in poverty will not develop the skills to provide an attractive labour force, and they may not even respond to incentives when these are provided. Malnutrition in early childhood can affect a person’s capacities for life. Second, although economic growth tends to reduce the incidence of poverty, it does not eliminate it.

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