CHARACTERISTICS OF TRANSITIONAL SOCIETIES

While it is often risky to generalize such divers nations as those in Africa, Asia, The Middle East
and Latin America, there are certain common economic features of developing countries, which
permit us to view them broadly in similar contexts. These include:

 Poverty
 Low income
 High population growth
 Low technology.
 Significance dependence on agricultural production& primary products for exports.
 Dualistic economy.
 High and increasing levels of unemployment and underdevelopment (disguised
unemployment.
 General economic backwardness & low levels of productivity.
 Foreign and trade dependence and dominance & vulnerability in international relations.
 Environmental degradation.

1. SIGNIFICANT RELIANCE ON AGRICULTURE

 In under-developed countries, two thirds or more people live in rural areas (70% in Kenya,
1999 census) and their main occupation is agriculture.
 There are four times as many people occupied in agriculture in some under-developed
countries as there are in advanced countries. In low income economies such as India, Kenya,
Bangladesh and Vietnam, more than 71% of the population is engaged in agriculture while
2%, 5% and 4% are engaged in it in the United States, Canada and Germany respectively.
 This heavily concentrates in agriculture are a symptom of poverty.
 Though it is the main occupation, it is carried out in the most unproductive manner, using
obsolete and outdated methods of production.
 Moreover, the average land holdings are as low as one to 3 hectares, which usually supports
10-15 people per ha.

2. POVERTY
Poverty means an absence of well-being or of capabilities that are generally accepted as being
desirable or valuable. The term poverty can be defined from various levels depending on the
people’s perception on the distinction of the poor from the rich. This can be represented
diagrammatically as follows:

BASIC NEEDS APPROACH

The poor are identified as those who cannot support themselves and wear ragged clothing.

INCOME/CONCUMPTION
The poor are identified as those who do not send their children to school or unable to secure
medical services and rely on traditional healers rather than health clinics.
 ASSETS PHYSICAL COMMON Land/cattle
PROPERTY Estates/cars/shares
CAPITAL PRIVATE Employment
HUMAN CAPITAL

(The rich own a vehicle, grinding mill and many cattle. In Kenya people say they are poor
because they do not have the animals, land, and granary as they used too many years ago.)

HUMAN DIGNITY/AUTONOMY
RIGHTS
POLITICAL FREEDOM AND SECURITY
EQUALITY(GENDER AND ETHNIC

(The poor are not only poorly housed and have no means of livelihood, but also powerless).

(a)General poverty and low levels of living

 An underdeveloped country is poverty-ridden.

 Poverty is reflected in low GNP per capital income and absolute poverty.
 According to the “World Development Report, 1994, 58.7% of the Worlds’ population in
1992 were living in low-income economies with average GNP per capital of $ 390; 26% in
the middle income economies of $ 22,160 GNP per capita.
 The report pointed out vast income disparities among nations. While Switzerland had $
36,080, Japan and USA had $ 28190 and $ 23240 respectively. The poorest $ 42 countries
had GNP per capita of $ 670 or less of this, Srilanka had $540, Palestine $ 420, both Kenya
and Nigeria had $ 310, India had $310, and Bangladesh $ 220 and Nepal $ 170.
(b)Absolute poverty

 It’s not relative poverty but absolute poverty that is more important in assessing such
economies. Absolute poverty is measured not only by low income, but also by malnutrition,
poor health, clothing shelter and lack of education.
 Thus absolute poverty is reflected in low living standards of people. Food is the major item
of consumption, where 80% of income is spent on it, as compared with 20% in advanced
countries. Such food is often of poor quality, dominated by starch.
 It’s currently assumed that those who live on less than a dollar a day are living below poverty
line, therefore wallowing in absolute poverty. Approximately 56% of Kenyans live below
this poverty line.

 THE VICIOUS CIRCLES OF POVERTY

These are circular relationships that tend to perpetuate the low level of development in Less
Developed Countries (LDCs). Nurkse explain the idea in these words:
“It implies a circular constellation of forces tending to act and react upon one another in
such a way as to keep a poor country in a state of poverty.”
 For example a poor man may not have enough to eat hence his health may be weak, hence his
working capacity will be how and thus poor. This aspect may be represented diagrammatically
as follows.

Capital Low
deficiency production

Low Low
investment income

Low Low
demand savings

4. DEMONSTRATION EFFECTS
The reason why the saving ratio does not rise with the increased level of income in the long run
is the “demonstration effect” This refers to the great urge in us to “keep up with the focuses”-
This is the habit of imitating the standard of living of our prosperous neighbors. Similarly, there
is a tendency on the part of people of the under developed countries to emulate the higher
consumption standards of advanced countries. As a result of the demonstration effect, the rise in
income is spent on increased expenditure and thus savings are negligible. This demonstration
effect is usually caused by foreign films, magazines and visits abroad.

This tendency to emulate advanced countries is not only found on individual persons but also on
government. These governments emulate social security programmes found in developed
countries such as minimum wage legislation, health insurance pension and provident funds
scheme. These measures put obstacles in the way of entrepreneurship and thus retard capital
accumulation

5. FOREIGN TRADE DEPENDENCE & VULNERABILITY IN INTERNATIONAL

RELATIONS
Under-developed countries are generally foreign trade oriented. This is reflected in exports of
primary products and imports of consumer goods. This too much of exports of primary products
leads to serious repercussions on their economies. This is because:
  The economy concentrates mainly on production of the primary exports to the
expense of other sectors of the economy.
 The economy becomes particularly susceptible to price fluctuations of the export
commodities.
 Too much dependency on these export commodities has led to dependence on imports
of manufactured goods.
 The subtle transfer of rich (mostly capitalists) country values, attitudes, institutions
and standards of behavior to third world countries- the net effect of all these factors is
to create a situation of ‘Vulnerability’ among third world nations, in which forces
largely outside their control, can have decisive and dominating influences on their
overall social and economic well-being.

6. DUALISTIC ECONOMY
A dual economy is the existence of two separate economic systems within one country. They are
common in LDCs, where one system is geared to local needs and another to the global export
market. For example, plantation or commercial agriculture, operating in the midst of traditional
cropping system.

POPULATION GROWTH

The rate of population increase quantitatively measured as the percentage yearly net relative
increase or decrease in which event it is negative in population size due to natural increase and
net international migration. Natural increase measures the excess of births over deaths or in more
technical terms, the difference between fertility and mortality.

Population increase in third world countries depend almost entirely on the difference between
their birth and death rates. Developing countries have higher population growth rates compared
to the developed countries.

The rate of population growth has a direct relation to the pace at which economic growth will be
achieved. To achieve sustainable economic growth, it is imperative that the rate of economic
growth surpasses that of population growth. This will ensure that the per capita income increases
(does not drop). However, Developing countries are generally characterized by high population
growth rate and dependency burdens which have negative impacts on the growth not only of
economic development but also the provision of basic needs to the increasing population.

The problem of population growth is therefore a problem of numbers between human welfare
and development.

 Population growth today is primarily the result of a rapid transition from along historical era
characterized by high birth and death rates to one in which death rates have fallen sharply
whereas birth rates especially in LDCs are only just beginning to fall from their historic high
levels. The decline in mortality is due to rapid technological advancement in modern
sanitation measures.
 Since 1950 developing countries accounted for 8.5% of global population increase. Even
between the year 2000 and 2025 population growth rate in Africa will still be high at 25%
while in Latin America and Asia will have declined. For instance Brazil in the 1980’s had
the lowest population growth and the highest rate of abortion.
 For a long time to come (a generation at least) Africa will still be hard pressed to sustain
rapidly growing human pressures on resources that are shrinking in quantity and quality.
 Elimination of poverty will remain troublesome unless current rates of population growth are
checked because of population pressure people are forced to work harder on shrinking farms
on marginal land with deteriorating quality of farm inputs and conditions of crop sales.
Consequently, however, incomes and material possessions cannot be sustained.

REASONS WHY POPULATION GROWTH SLOWS DEVELOPMENT PROCESS

Here are four reasons why population growth slows the development process.

 It worsens the difficult choice between higher consumption and the investment
needed to bring about higher consumption/increased per capital income in the future.
If the Per capita incomes are lower the faster the population growth, making
investment in population quality through education, health etc difficult to achieve.
 Rapid population growth also severely draws down limited government revenues
simply to provide the most rudimentary economic, social and health services to the
additional people. This in turn further reduces the prospect for any improvement in
the levels of living for the existing generation.
 In many countries where populations are still largely dependent on agriculture,
population growth threatens the delicate balances between scarce natural resources
and the people’s livelihood. In fact the problem arises because rapid population
growth slows down the transfer of labor out of low productivity agriculture to modern
agriculture and modern jobs. In Kenya 70% of the labor force will probably still be
working in agriculture as late as 2025 and the number of workers will still be twice
what it is today, the result is likely to be continuing low incomes for many families
and in some cases a stress on traditional agricultural systems and environmental
damage that threatens the economic well-being of the majority poor. High population
growth mean limited investment in human capital formation, hence mainly low
skilled manpower is available, which cannot move out of low productivity
agriculture.
 Rapid increases in population make it hard to manage the necessary adjustments to
promote economic and social change. High fertility in particular is a major
contributor to rapid urban growth; cities in developing countries are growing to
unprecedented sizes. Such growth poses enormous new problems of management
even to maintain let alone improve living conditions for city residents.
 High population growth particularly if it surpasses the rate of production of goods and
services causes unemployment.

REASONS FOR HIGHER POPULATION GROWTH

  The high population growth rate in developing countries is due to high crude birth
rates and declining death rates.
 Crude birth rate refers to the yearly number of live births’ per 1000 population. It is
over 30 per 1000 in LDCS (DC). A death rate is the yearly number of deaths per 1000
population.
 Improved health conditions and the control of major infectious diseases as well as
better methods of public health and sanitation have reduced mortality and increased
fertility thus LDC-DC death rates differences are substantially smaller than
corresponding differences in birth rates.

Thus the average population growth is about 21% per year compared with about 0.6% per year in
developed countries.

This rapid increase in numbers aggravates the shortage of capital in such economies because
large investments are required to be made to equip the growing labor force even with absolute
equipment.

An important consequence of high birth rates is that a larger proportion of the total population is
in the younger age groups thus, children under the age of 15 years make up almost one half of
the total population in the developing countries as opposed to approximately one-quarter of the
total population in developed countries.

Accordingly the active labor force in most developing countries has to support proportionately
almost twice as many children as it does in richer countries.
Furthermore, Developing countries have short life and work expectancy which means that a
smaller fraction of their population is available as an effective labor force.

Average life expectancy at birth is roughly 50 years in developing countries while it is 74 years
in developed countries. Low life expectancy means that there are more children to support and a
few adults to provide for them. On the other hand the proportion of people over the age of 65
years is much greater in the developed countries.

Older people as well as children are often referred to as an economic dependency burden in the
sense that they are non-productive members of the society and therefore must be supported by a
country’s labor force (usually defined as those between ages 15 and 64 years) and older.
Dependency ratio is the proportion of youths below 15 years and older people over 64 years to
economically active adults (ages 45-64 years)

The overall dependency burden (i.e. both young and old) represents only about one-third of the
population of developed countries compared with one half of the population of Developing
countries. It is important to point out that over 90% of the dependents in developing countries are
children whereas only 66% are children in developed countries. Thus developing countries have
high dependency burdens.

With many dependents to support, it is difficult for the worker to save for purpose of investment
in capital equipment. It is also a problem to provide their children with education and basic
necessities of life that are essential for the country’s economic and social progress in the long
run.

POPULATION CONTROL MEASURES

 In countries or regions where the population size, distribution and growth are viewed as
an existing and/or potential problem, the primary objective of any strategy to limit its
further growth must deal not only with population variable per se but also with the
underlying social and economic conditions of underdevelopment. Problems such as
absolute poverty, gross inequality widespread unemployment (especially) among
females), limited female access to education, a malnutrition and poor health facilities
need to be given high priority. Their amelioration is both a necessary concomitant of
development and fundamental motivational basis for the expanded freedom of the
individual to choose an optimal an in many cases, smaller-family size.
 In order to bring about smaller families through development induced motivations, family
planning programmes, providing both the education and the technological means to
regulate fertility for those who wish to regulate it need to be established.
 Developed countries need to assist developing countries achieve their lowered fertility
and mortality objectives not only by providing contraceptives and funding family
planning clinics but more importantly (a) by curtailing their own excessive depletion of
non-renewable resources through programmes that intensively utilize such resources,
(b)Making genuine commitment to eradicating poverty and illiteracy in developing
countries as well as their own, and (c ) by recognizing in both their rhetoric and their
international economic and social dealings that development is the real issue not simply
population control.

POLICIES TO REDUCE FERTILITY

If parents have many children in the hope of economic gain, the first step in reducing fertility is
to reduce their poverty and their uncertainty about the future. In this sense high fertility can be
reduced through:

 Provision (increase access to) of good health services and better nutritional status for
both parent and child in order to reduce the need for many births to ensure against
infant and child mortality.
 Provide education and ensure a rise in family income levels through increased direct
employment and earnings of husband and wife.
 Provide consumer goods and social opportunities that compete with child bearing.
 Establish family planning programs to provide health and contraceptives services.
 Manipulation of economic incentives and disincentives for having children e.g.
through the elimination or reduction of maternity leaves and benefits, the reduction or
elimination of financial incentives and or imposition of financial penalties for having
children beyond a certain number, the establishment of old- age social security
provisions and other forms of old-age insurance, and minimum age child labor, the
raising of school fees and the elimination of heavy and higher public subsidies for
 secondary and higher education, and finally the subsidization of smaller families
through direct money payments.
 Use of media and educational process “both formal (school system) and informal
(adult education) to persuade people to have smaller families.
 Coerce people into having small families through the power of state legislation and
penalties.
 Raise the economic and social status of women and hence create conditions favorable
to delayed marriage and lower marital fertility. Such approaches include creation of
employment for women outside the home. Make available income- earning
opportunities for women to become economically self-reliant and an increase in the
education of women.

SUMMARY/CONCLUSION
Education, health, alleviation of poverty and government effort to ensure widespread access to
family planning services have all played a more leading role in reducing the rate of population
growth in most developing countries than reliance on GNP per capita. Urbanization,
industrialization and a shift from household production as practiced in most developed countries
to implicitly reduce population growth rates.

UNEMPLOYMENT
INTRODUCTION

 Developing countries have inadequate or inefficient utilization of labor compared with the
developed countries. Almost 30% of the combined rural and urban labor force in the
developing countries is unutilized

Definition

Unemployment is a situation where the capable and willing people have no accessibility to
employment opportunities or are not fully utilized. Unemployment is partly caused by:
 High population growth particularly where it surpasses the rate of economic growth.

 It may also be due to the spread of education and the failure of the industrial sector to
expand along with the growth of the labor force, as well as the structural rigidities and
lack of man power planning

Generally unemployment results from a relatively slow growth of labor demand in both
the modern industrial sector and in traditional agriculture combine with a rapidly growing
labor supply, especially as a result of accelerated population growth and high levels of
rural urban migration.
 Developing countries are characterized by high and rising levels of unemployment. The
situation is more serious in urban areas due to rural-urban migration. The number of
people searching for work in developing countries depends primarily on the size and age
composition of its population
  Reduction in death rates expands the size of labor force while continuous high birth rates
create high dependency ratios and rapidly expanding future labor forces.

FORMS OF UNEMPLOYMENT

 Open unemployment
Open unemployment refers to those people who are able and often eager to work but for
whom no suitable jobs are available. It can be both voluntary and involuntary. Voluntary
includes people who exclude from consideration some jobs for which they could qualify
implying some means of support other than employment.

 Underemployment
This refers to those people who are working less than they would like to work on a daily,
weekly or seasonal basis. Underemployment is found in agriculture where farmers and
their families have insufficient land equipment to keep them fully employed and at the
same time they are not in a position to secure employment in other occupations.

 Disguised unemployment
This refers to people who seem to be occupied on full-time basis either on farms or
offices even though the services they render may actually require less than full-time
basis. It occurs as a result of a particular task being performed by more labor than is
necessary. This labor can be taken away from the occupations without necessarily
affecting production. Thus, the withdrawal of a certain quantity of the factor labor to
other uses will not necessarily diminish the total output.

 Hidden unemployment
This refers to people engaged in “second choice” employment activities perhaps
notably education and household chores, primarily because job opportunities are not
available either:
 At the levels of education already attained or
 For women given social mores. In this case educational institutions and
households become “employers of last resort”

 Frictional unemployment
This is unemployment arising from the normal operation of the labor market. It occurs
during normal working of the economy when:
 Workers quit jobs to find other better ones.
 Employers fire workers and (hire) look for better ones to replace them.
 Workers withdraw in order to go for special training.
This type of unemployment is usually short-term in nature and occurs even in period of
full employment.

 Structural unemployment
Structural unemployment may be said to exist when there is mismatching between the
unemployed and the available jobs in terms of regional location brought about by lack of
geographical mobility, required skills or any other relevant dimension. It is caused by
 structural changes in the economy. As economic growth proceeds, the mix of required
inputs changes, as do the proportions in which final goods are demanded. These changes
require considerable economic readjustment.

Structural unemployment occurs when the adjustments are not fast enough so that severe
pockets of unemployment occur in industrial areas, and occupations in which the demand
for factors of production is falling faster than is the supply.

 Cyclical unemployment
Cyclical unemployment is the result of less than full use of productive capacity due to
recession or depression. It is therefore due to insufficient aggregate demand in the
economy. This causes workers to be laid off en mass. If aggregate demand can be
strengthened by an increase in consumption, investment and government spending, the
levels of business activity can be increased and the cyclical unemployment reduced.

STRATEGIES FOR OVERCOMING UNEMPLOYMENT

 Creating an appropriate rural-urban economic balance. The main thrust of this activity
should be in the integrated development of the rural sector, the spread of small- scale
industries throughout the country side, economic activity and social investment towards
the rural areas.
 Expansion of small-scale labor-intensive industries. These can be accomplished through
government investment and incentives, particularly for activities in the urban informal
sector, and indirectly through income redistribution to the rural poor whose structure of
consumer demand is both less import-intensive and more labor-intensive than the rich.
 Encourage appropriate labor-intensive technologies of production especially through tax
incentives.
 Invest generously in basic education, relevant and new skills and workers retraining.
 Liberate the private enterprise and make markets more accessible to everyone.
 Extend employment safety nets through labor-Intensive public works programmes in
periods of major economic distress.
 Early retirement at the optional age of 40 years to give room for the young and active.
 Wooing of investors to expand trade and industry and expansion of the agricultural
sector. This can be achieved by instituting policy measures that will attract foreign
investment and the transfer of technology to Kenya. With regard to the agricultural
sector, it should be possible to generate farm incomes that grow by 5% per year through
encouraging the subdivision of large firms (using taxation to ensure that all cultivable
land is utilized).
 Ensure that women are allowed higher occupational choices in all sectors of the
economy. To be pursued through expansion of education and other opportunities that
will make women equally productive.