Created by:- Group 2

Introduction
Countries that are not fully industrialized or do not

have sophisticated financial or legal systems.

These countries, also called members of the Third

World, typically have low levels of per-capita income, high inflation and debt, and large trade deficits.
The World Bank may be helping them by providing

loan assistance.

Features
Poverty
PER CAPITA INCOME

INFLATION
ILLITERACY

AGRICULTURE AND FOOD

CORRUPTION

Poverty
Predominant poverty.
An extreme difference

between absolute poverty and great wealth.

An extreme minority holds

the wealth and a huge majority are in abject poverty.

Case study
Large populations of the 420 million people living in Latin

America and Caribbean have begun the third millennium living under conditions of poverty.
Near 40% of households are poor and 16% extremely

poor .
Poverty is even more widespread and deep in rural

areas where 32% of population live and work.

Near 55% of rural households are poor and about 33%

extremely poor.

Per Capita Income

An LDC economy needs to

invest 10 to 15% of net income to grow and many cannot manage this.
Rates of return less than

population growth.
Low rates of return frustrate

future investment and leave debt unpaid.

Case study
The Soviet invasion of 1979 destroyed much of the

country's limited infrastructure patterns of economic activity . Gross domestic product has fallen substantially since the 1980s due to disruption of trade and transport as well as loss of labor and capital. According to the IMF, the Afghan economy grew 20% in the fiscal year ending in March 2004, after expanding 30% in the previous 12 months

inflation
The overall general upward price movement

ofgoodsandservicesin aneconomy is called inflation. Inflation is often caused by a increase in the supply of money, usually as measured by the Consumer Price Indexand the Producer Price Index. Over time, as the cost of goods and services increase, the value of a dollar is going to fall because apersonwon't beabletopurchaseas much with that dollar as he/she previously could. The Fed actively tries to maintain a specific rate of inflation, which is usually 2-3% but can vary depending on circumstances. opposite ofdeflation.

Agriculture & Food

Predominantly agricultural (70 - 90% of the labour force). Predominantly rural population (80% urban in UK, less than 20% in LDC). Subsistence or cash crop based poverty.

Insufficient quantity of food for a daily diet.

Insufficient quality of food for a daily diet.

Poor diet leaves openness to disease, poor growth, early death and childhood mortality.

Illitracy
Educational provision is

very low or inadequate for economic or information needs.

Open to disease through

lack of knowledge, e.g. sexually transmitted diseases.

Inability to produce

educated workforce for technological growth.

Inequality and absence of

women's rights undermine essential birth control, education, resistance to custom and good health.

References
http://www.globalissues.org/issue/2/causes-of-

poverty.
http://www.change.freeuk.com/learning/socthink/ldc

s.html.