1)  Deficiency of capital:

The low level of capital formation in an under developed country is due both to the weakness of the inducement to invest and to the low propensity and capacity to save. In such an economy, the low level of per capita income limits the size of the market demand for manufactured output, which weakness the inducement to invest . The low level of investment also arises as a result of the lack of dynamic entrepreneurship, which was regarded by Schumpeter as the focal point in the process of economic development.

2) Excessive Dependence on Agriculture: Under – developed countries are predominantly agricultural they are nonetheless much less efficient in agriculture than are the industrial countries As prof. J,K Galbraith has put it a purely agricultural country is likely to be unprogressive even in its agriculture. Prof. Gunnar Myrdal explains this paradox thus “industrialization creates technology which can then be applied to agriculture, but not vice versa.”

3) Inequalities of Income and Wealth: Another distinguishing characteristic of the under –developed economies is the disparities in income and wealth enjoyed by the rich and poor sections of society. The lower national income of the economically backward countries is more inequitably distributed than in the advanced countries. According to Colin Clark’s estimates, labor’s share of net income in the rich countries.

4) Dualistic Economy: The under developed countries present sharp contrast in all walks of life. There is the old and new, developed and under developed the educated and the illiterate , the rich and poor existing side by side. It is both a bullock cart and motor car economy. There are pockets of extra rich and ultra modern people and vast masses steeped in abject poverty. There are efficient modern industries and the languishing indigenous handicrafts, and son.

5) Lack of Entrepreneurial Ability and Skilled Technicians: In the under – developed countries generally , there are very few people , who can be described as daring and dynamic entrepreneurs. There is also woeful lack of technical know-how.

6) Inadequate infrastructure: The under-developed countries are also characterized by the lack of sufficient economic and social overheads. The means of transport and communication, irrigation and power, the banking system, the educational and medical facilities’ are all imperfectly developed and they are utterly inadequate to serve the existing population.

7) Foreign Trade Orientation: An under- developed economy is generally foreign trade oriented. Traditionally under- developed countries have exported raw material and imported consumer goods and machinery The ratio of export production to total output is normally high.

8) Rapid Population Growth and Disguised Unemployment: The diversity among under- developed economies is perhaps nowhere so much in evidence as in respect of the facts of their population as regards its size, density and growth . While we have examples of India and China with their teeming millions and galloping rates of growth.

9) Under- utilization of Natural Resources: The natural resources in and under –developed economy are either unutilized or under- utilize. Generally speaking, under- developed countries are not deficient tin land, water, minerals, forest or power resources though they are untapped.

10) Economic Backwardness of the People: The people in under – developed countries are economically backward, that is , the quality of the people as productive agents is low. Instead of acquiring the greatest possible control over their physical environment, the people have struck a balance with nature at an elementary level. They have been relatively unsuccessful in solving the economic problem of man’s conquest of his material environment.

11) Poor Consumption Pattern: The low level of earnings in the under- developed countries is reflected in their low level of living. The bulk of their income is spent on necessaries of life, particularly food consisting mostly of cereals and devoid of nourishing items like fruits, meat, eggs, milk etc. They are too poor to afford comfort and luxuries. The proportion of expenditure on housing and clothing is also very small.

12) Peculiar Demographic and Social Characteristics: There are certain demographic and social characteristics typical of the under developed countries. Leaving a few under populated and unde developed countries, the density of population is very high considering the resources and employment opportunities available. There is a very high proportion of the population in the age group 0-15 and a lower proportion in the working group 20-60 years.