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Economic Underdevelopment And Sustainable Development In The

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DOI: 10.1007/s10668-003-4012-9

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Environment, Development and Sustainability (2005) 7:95–115

c Springer 2005
DOI 10.1007/s10668-003-4012-9

ECONOMIC UNDERDEVELOPMENT AND SUSTAINABLE

DEVELOPMENT IN THE WORLD: CONDITIONING
FACTORS, PROBLEMS AND OPPORTUNITIES ∗

FRANCISCO J. AYALA-CARCEDO† and

MANUEL REGUEIRO Y GONZÁLEZ-BARROS∗
Instituto Geológico y Minero de España (Ministerio de Ciencia y Tecnologı́a
(∗ author for correspondence, e-mail: m.regueiro@igme.es)

(Received 10 March 2003; accepted 21 November 2003)

Abstract. This paper deals with the various factors that condition underdevelopment in the world. It suggests
some alternatives and points out the potential opportunities that both the developed and the underdeveloped world
will have in the coming years to change the gloomy prospects that we see today. The present paper outlines
the trends in historical priorities in development, changing as they pass from economic development to social
development to ecological conservation – the three pillars of Sustainable Development.
The paper analyses the importance of geography, a very relevant and often neglected conditioning factor.
Also, it analyses the role of socio-economic conditioning factors like political immaturity, demographics, land
ownership and external debt.
Furthermore, the current opportunities for economic take-off are presented, from cash surpluses to low interest
rates, from natural resource management to tourism or migration, from the Information Revolution to liberal-
isation of agricultural markets. Current obstacles are also analysed. The paper, on the basis of current facts
and figures, reaches the conclusion that there is a structural need for sustained development aid for most poor
countries, but it must be distributed in a more rational way.

Key words: conditioning factors, economic take-off, economic underdevelopment, geographical factor,
globalisation, opportunities, sustainable development.

1. Introduction

As one of the scholars of development has said: ‘Underdevelopment is one of the

most important problems of our times’ (Sylos, 1982). Today, 840 million suffer
famine and one-tenth of world’s population lives with less than 1 USD/day.
The problem of economic growth was analysed in depth by Colin Clark in
1940 identifying the main cause in the increase of productivity. The problem of
underdevelopment was widely treated during the period 1960–1975, with regard
to the problems of de-colonised countries and underdevelopment’s economic and
social bias (Amin, 1973; Bairoch, 1971; Cardoso and Faletto, 1967; Franck, 1966;
Furtado, 1966; Kenwood and Lougheed, 1972; Prebish, 1968). Underdevelopment

∗ Readers should send their comments on this paper to: BhaskarNath@aol.com within 3 months of publication of
this issue.
96 F.J. AYALA-CARCEDO AND M.R. Y GONZ ÁLEZ-BARROS

Figure 1. The traditional socio-economic approach when integrating the ecological dimension has given way to
the new paradigm of the Sustainable Development (Ayala-Carcedo, 2000).

is not, by any means, a new subject in any way, except for the current emphasis on
its relative dimensions and ecological impacts.
Since 1987, after the work carried out by the Bruntland Commission of the
United Nations, the idea of Sustainable Development, resulting from evolution
and a historical need (Ayala-Carcedo, 2000), has started to be disseminated to a
larger and larger extent through ever wider circles. This in turn has meant – in con-
trast to the situation several decades ago where the focus was on the economic and
social problem – that today the problem can only be dealt with from the perspec-
tive of the Sustainable Development, integrating economic, social and ecological
sustainability (Figure 1).
Much has been already written on these subjects and there is little can we add
to further emphasise the deep contrasts between the conditions of daily life and
the opportunities available to those born in a developed country and those born
in an underdeveloped country (UDC), a circumstance none of us have any con-
trol over. For Stylos (1982), ‘To study underdevelopment can be a way to study
man’s tragedy’; for Arnanz and Ardid (1996) ‘A huge amount of men and women
who inhabit the Earth see their present and their most immediate future with
no hope’.
Two indicators of the Human Development Index of United Nations, Life
Expectancy at birth, and Illiteracy Rate, as reflected in Figures 2 and 3, correlate
 ECONOMIC UNDERDEVELOPMENT IN THE WORLD 97

Figure 2. For this group of 33 countries there is a clear correlation between one of the elements of the Human
Development index of the UN, the life expectancy with the PCI. It can be observed that there is a first stretch
of rapid rise with income up until 64 years with 1000 US$ followed by another up until 70 years for 3700 US$.
Obtaining an average goal of 64 years for the LDC (<500 US$) would require a minimum of 20 years of growth
at 3.5% annually per capita.

Figure 3. The adults illiteracy rate is another of the elements of the Human Development Index of the UN which
correlates clearly with the PCI. Obtaining a rate under 10% implies rising the PCI over 4000 US$. There are,
though, wide differences for the same level of income. The higher rates generally correspond to Muslim countries
with very high rates of women illiteracy due to the existing discrimination; the lower rates corresponds to current
or past socialist countries.
98 F.J. AYALA-CARCEDO AND M.R. Y GONZ ÁLEZ-BARROS
significantly with per capita income (PCI). This points to a cause–effect relationship
(in line with the fact that historically, economic development preceded social
development in developed countries), probably in a two-fold way, in the areas
of social and economic development. Such correlations have been obtained for
a group of 33 countries covering the whole spectrum of PCI and demographics
worldwide.
The ethical dimension of this reality is obvious and is an inevitable conclusion
for any person with a minimum of humanity. It is also a motivation for solidarity,
since aid and consciousness raising are always the starting point to change things.
The tangible result of this solidarity can be estimated in the amount of development
aid, which is ∼0.3% of the GDP of the developed countries (a sixth of the agricultural
subsidies disbursed in rich countries according to the World Bank, 2002), far from
the 0.7% promised at the Rio Summit in 1992. Still, such a ratio is only a third of the
amount dedicated by the colonial metropolis in 1960 (Bairoch, 1971). It is clear that
an ethical mentality by itself has severe limitations in finding a solution to the problem
of underdevelopment. If the effort is not conducted so as to search for synergies with
economical rationality, it will drive people in UDCs to frustration.
The reason probably lies in that economic reality, the ‘locus’ in which a sub-
stantial part of the development process occurs, is a system driven by interest more
than by feeling, by money and not by goodwill, by everyday realities more than
by deeper motivations. Economic reality is closer to necessity than to liberty, to
the is than to the should be. Economic rationality lies in producing efficiently at
competitive costs to satisfy an economic need. That is, a feasible need that can
be paid for, thus sustaining those producing work, capital, and nowadays, since
the expansion of the idea of Sustainable Development, also those maintaining nat-
ural resources and ecosystems, so that they continue producing, making the system
feasible economically.
Although the business world, in order to accommodate itself to the reality of the
current social conscience, includes some elements of social and ecological ethics
(Ayala-Carcedo, 2001a–c), its economic and operating principles are substantially
similar to those of 200 years ago: there is no survival or development if there is no
economic survival and economic growth.
The problem embedded in the foundations of the deep contrasts that offend our
sensibilities is that the needs of the underprivileged are human needs and not the
economic ones we suffer from in developed countries since they lack our economic
solvency. The process of economic development in their societies has not yet reached
that levels of excess production that allow the expansion of the Welfare State. This
was also the reality in today’s post-industrial countries 200 years ago. Then most
of the people lived on the edge of subsistence, whereas hereditary aristocrats lived
in relative opulence as owners of the most precious productive good: land.
The lesson that a historical review of the genesis of the idea of Sustain-
able Development transmits is precisely this: economic growth preceded social
development and this in turn preceded ecological sustainability, its three intercon-
nected pillars (Ayala-Carcedo, 2000).
 ECONOMIC UNDERDEVELOPMENT IN THE WORLD 99

The First Industrial Revolution (1765–1885), that of steam, coal, railway and
textile factories, did not achieve, except in its final stages, as a result of the rebellion
of the working class against their extremely hard lives, the first rudiments of social
sustainability (Ayala-Carcedo, 2001b). The Welfare State became established only
during the Second Industrial Revolution (1885–1960), that of oil, electricity and
the automobile, and to a certain extent was an anticyclic strategy to expand the
Society of Mass Consumption to avoid another depression like that of 1929. The
growth of the third side of the tree pillars of Sustainable Development (ecological
sustainability) belongs to the last 40 years: the current post-industrial phase.
Thus, although economic development is an essential requirement for Sustain-
able Development, 80% of the underdeveloped world plays no part in it. There,
the survival of ecological or cultural features – which seem advantageous from our
developed urban logic – is part of something that is inevitably dying in a globalised
world: the agricultural society. Such an understanding is not only fundamental for
their future, it is also fundamental for the future of developed countries themselves
since the ecological and social priorities of the UDCs, which represent most of the
world, will always be subordinate to the economic priorities. The consequences of
this reality do not need to be exaggerated, since we are all in the same boat: Earth.
Our planet is starting to show signs of a potential major ecological crisis, with
climate change, a crisis in fisheries, ever growing sea pollution, desertification/
deforestation in dry climates and rainforests, water and soil pollution or social
crises such as global terrorism, waves of migration, etc. and both crises result from
underdevelopment. Such a situation is starting to erode developed democracies
particularly after the terrorist attack of September 11, 2001.
Consequently, both from the ethical perspective and from the very ecological
and social bases of development – we should not forget the ecological footprint
left in undeveloped countries by developed ones –, we should try to see how we
can overcome – as much as possible – the endemic economic underdevelopment
in which almost five-sixths of Humanity is living.
To achieve this within the framework of a Globalisation accelerated by information
technology and the abundance of capital, and the collapse of the state capitalism of
the Soviet block, is probably the challenge of our time and of the 21st century. As
will be shown in the coming sections of this paper, it is a very difficult challenge
that will not be solved by joining the side that rejects antiglobalisation on merely
ethical grounds (in despite as a critical conscience is necessary).
The underdeveloped world needs development more than charity (which might
be necessary in cases of crisis but which, in the long run, creates a culture contrary
to development and self-initiative).

2. Problems inhibiting economic take-off: the geographical factor

First, it must be noted that underdevelopment – a word coined by US president

Truman in 1949 – is a very heterogeneous world; in fact, Rousset (1994) speaks of
‘The Third Worlds’.
100 F.J. AYALA-CARCEDO AND M.R. Y GONZ ÁLEZ-BARROS
In this sense, the term Third World seems inadequate. It was first used by
Alfred Sauvy in 1952 to define the group of countries outside the two oppos-
ing Cold War blocs (comparing it with the Third Estate that drove the French
Revolution of 1789). In fact this term was already unjustified after the collapse
in 1989 of what Débray (1985) called rightfully the ‘blocked bloc’.
The term South seems unsuitable as well, since, although it maintains a more
than evident geographical logic, it tempts some to find certain genetic explanations
for the problem, a position we will comment on later.
In our opinion, the right designation, in order to analyse both symptoms and
problems as well as the potential remedies, is UDC (those with an annual PCI
under 5000 US$). The UDC can then be further subdivided into two subgroups:
less developed countries (LDC) and developing countries (DC). The latter contains
a subgroup of countries with a PCI over 3000 US$, called advanced developing
countries (ADC), on the brink of economic expansion. Within the first group of
UDC, that is the LDC, we can include those with PCI under 500 US$. These show
generalised obstacles for growth in the Rostowian sense (Rostow, 1960), that is,
they face geographical, sociocultural and economic obstacles. The DC show one
or several problems for development, but they possess some factors in their favour
(Figure 4).
Sometimes, in a sociological reductionism, there is a tendency to think that
the primary reasons for problems always lie in cultural or religious factors. For
example, Weber (1922) claimed that the key factor in the emergence of the
capitalism was Protestantism. Likewise, the common Western prejudice about

Figure 4. Both the variety of problems and opportunities, as well as the rigidity of the possibilities of acting
against them, reveal the complexity of the problem of the take-off towards development.
 ECONOMIC UNDERDEVELOPMENT IN THE WORLD 101

underdevelopment in the Islamic world shows a lack of knowledge that history

easily refutes (Ayala-Carcedo, 2001b). Obviously, reality is usually more complex.
Historically, nature does not provide the same opportunities for all in terms of the
land available for every community.
Cipolla (1962) pointed out the strong geoecological conditioning of agricultural
societies – which in fact was a general trend in Europe far into the 19th century –
by means of the influence of these factors on the food productivity and animal
energy. Huntington (1924) showed the relation between climate and civilisation.
In 1975, Gill Carter and Dale, in Topsoil and Civilisation, showed the influence
of soils – resulting from the interaction between climate and rocks – on historical
evolution.
Hassan (1981) showed the dependence of optimum productivity in the main
ecosystems – maximum limit of the food and energy availability – on annual rain-
fall. Lamb (1995) has shown the effect of natural climatic changes on the historical
evolution of several cultures and civilisations such as the Saharan, Mesopotamian,
Indian and European during the Little Ice Age, a subject that Huttington had
already dealt with in relation with the decline of the Mayan Culture.
Diamond (1998) has shown the almost decisive role of favourable ecological
conditions (presence of wild agricultural vegetables and domesticated animals, and
a not an overly arid climate) in the emergence of agriculture and cattle raising in
the Neolithic and the early transition to civilisation in the Bronze age.
Already Harris (1968) and others had pointed out what a severe handicap the
lack of domesticated animals as suppliers of meat, milk, organic fertiliser and
energy was for Africa, America and Australia, with respect to the rest of the
continents. This handicap resulted from biogeographical and bioclimatic barri-
ers, plagues and availability of aloctonous fauna. They also pointed out the fact
that European agriculture depended on rains, impossible to control centrally; then
favoured feudalism. Wittfögel (1957) outlined the role of the combination of
big rivers and arid climates in the rise of the first great hydraulic civilisations:
Egypt, Mesopotamia and the Indus Valley. Then, irrigation favoured centralised
and theocratic regimes: the Asian Despotism. None of these regimes passed to
capitalism. Thus, this difference would favour in mild climates the appearance and
development of capitalism through feudalism.
The comparatively lower fertility of dry farming in the Mediterranean countries
relative to those of the wet Europe, the total or relative lack of cheap coal, together
with orography and the peripheral character of the Mediterranean with regard to
the European core, has been important in the differential delay in Spanish and
Mediterranean development (Ayala-Carcedo, 1997).
It cannot be an accident that most of the developed countries are located in
medium latitudes with mild climates, possibly explaining the expansion of some
other countries, such as the Scandinavian countries or Switzerland, as a result of
the development of their neighbours and thanks to favourable natural conditions.
Abundant hydraulic energy and wood for paper pulp in the Northern countries and
102 F.J. AYALA-CARCEDO AND M.R. Y GONZ ÁLEZ-BARROS
a strategic location in the case of Switzerland aided their development (Landes
et al., 1988).
Nor can it be accidental that to speak of the group of developed countries is to
speak of the North. The reason is that the size of emerged lands on Earth is greater
in the Northern hemisphere, where, as Diamond has pointed out, the longitudinal
dimension is higher than in the Southern continents, and the climatic barriers which
have prevented or impeded the diffusion of species and crops is much lower. We
cannot forget that up until 150 years ago the economic base of most of the world
population was agrarian and this fact defined the initial conditions for growth and
a society’s ability to obtain the consecutive developing advantages that history has
shown to be decisive. This factor, and not racial or cultural reasons, is the main
and necessary primary cause of Euro-American economic, political and cultural
hegemony.
Conversely, infertile soils inhospitable to agriculture are located in UDCs. These
countries have most of the dry land – inhospitable for agriculture – as the arabic
or jungle areas over old geologic shields, such as the South American, lacking
fertility due to the agricultural poverty of their soils, a result of the climate, with
scarce nutrients and high vulnerability to water erosion by intense rains and hostile
to man and cattle due to plagues and endemic epidemics. Whenever present in
developed countries, as is the case of the North American or Australian deserts,
the regions are today demographically completely emptied.
On the other hand there are factors favouring transport and commerce such as
proximity to coasts, measurable using the rate between coasts length and surface.
Western Europe (in fact the huge peninsula of Eurasia with coasts where there
are abundant shears that form coastal inlets) the Mediterranean, the American
Great Lakes zone and maritime countries such as Japan, Italy or Chile have sub-
stantial geographical advantages over continental countries such as Russia, the
Central African countries or the interior of Australia.
The same can be said of the advantages of navigable rivers, which Spain lacks
due to climatic reasons, or the abundance of mountains, an adverse factor for com-
merce which together with a interior continental location and dryness explain the
isolation and poverty of Afghanisthan and its political immaturity: feudalism and
war lords.
In the last few years, new empirical research carried out by the Center for
International Development at Harvard University has confirmed all the above men-
tioned information. As its director, Jeffrey D. Sachs, stated in 2000 ‘Most recent
cross-country analysis of economic growth has neglected physical geography as
a determinant of economic growth’. Gallup et al. (1999) concluded that ‘loca-
tion and climate have large effects on income levels and income growth, through
their effects on transport costs, disease burdens and agricultural productivity’.
Mellinger et al. (1999) using a global analysis with a Geographical Information
System has concluded that ‘GDP per capita and the spatial density of economic
activity measured as GDP per km2 are high in temperate ecozones and in regions
proximate to the sea’. Voortman et al. (2000) proved that the usual approach of
 ECONOMIC UNDERDEVELOPMENT IN THE WORLD 103

exclusively blaming socio-economic factors for the failure of a large part of Africa
during the Green Revolution is not adequate since it forgets the disadvantageous
edaphic factors of tropical soils.
Certainly these are not conditions that can explain everything, and they are
not decisive factors, but they are strong conditioning factors and not taking them
into consideration obscures the lack of comparative opportunities of many coun-
tries which are today at the back of underdevelopment line, and tends to fall
into the trap of racists’ or pseudo-psychological pseudo-explanations such as the
alleged indolence congenital to Latin races – rulers of the greatest empires of the
15–18th centuries – or to colour – even though dark-skinned Egyptian pharaohs
reigned when in Europe there were not yet even States. As Bairoch (1971) has
pointed, the most frequent model of industrialisation, the British model, had a
essential forerunner: the Agricultural Revolution, which freed up part of the labour
force by substantially increasing yield and productivity (before the work of two-
thirds of the population was needed to feed everyone). The Agricultural Revolution
– a techno-economic change with high social impacts – also increased the pur-
chasing power of the land owners. But the group of features needed, that is, the
suppression of fallow lands and the annual rest of fields, was not then possi-
ble in the Mediterranean climates due to climatic reasons and soil poverty. This
was one of the most powerful reasons for the later development of countries like
Spain (Ayala-Carcedo, 1997). On the other hand, the omission of the geoecological
factors has resulted in failures like the Green Revolution in Africa.

Figure 5. Less economic development means higher weight of the agriculture in the GDP. Up until 2000 US$ the
weight drops sharply and very slowly from the take-off which can be located at around 5000 US$. Considering
the weight of agriculture in the LDC (<500 US$) its incidence in the growth is very important turning it in a
strategic sector for development and at the same time contributing decisively to solving the hunger problem.
104 F.J. AYALA-CARCEDO AND M.R. Y GONZ ÁLEZ-BARROS
As shown in Figure 5, the lower the PCI, the greater the weight of agriculture in
the GDP. Since fertile land is a condition for development, its lack is an obstacle
for UDC which condemns them to a vicious circle of underdevelopment.
All this emphasises the need to give priority to agricultural development, as
many experiences – such as those of Taiwan or South Korea (Rousselet, 1994) –
have already shown, and the importance of liberalising agricultural markets, par-
ticularly those of the EU and the USA, which are heavily subsidised. This is much
more important than the development aid itself. The positive role of FAO in this
task, limited by the scarce budget, must be enhanced.
We must also take into consideration the nature’s gifts in the form of mineral
resources. While there is a lack of coal in the Mediterranean, it is abundant in
the UK, Germany and the Netherlands. The coal, oil and pristine territories in the
USA, help to explain many things. Andrews (1991) has shown the importance of
natural resources in the historical differential development in Europe.
It is obvious that Argentina and Chile have more opportunities for productive
agriculture than Tanzania or the Muslim countries which are located in the arid
zones of Eurasia and Africa.
The existence of those objective geographical factors in underdevelopment
is and has been a difficult handicap for an economic take-off. These objec-
tive factors outweigh and negate the possible benefits of well-intentioned
voluntarism.

3. Problems inhibiting economic take-off: socio-economic problems

3.1. P OLITICAL IMMATURITY

Another factor that severely conditions growth possibilities, and is closely related
with the geographic factor is political immaturity, very relevant in de-colonised
countries in the 20th century that had not developed into territorial states before
colonisation, or that grouped different people according to the colonial distribution
on 19th century maps. Many post-colonial wars, particularly African, have taken
advantage or resulted from this fact; one need only think of Biafra, Ethiopia or
Ruanda.
Today’s developed countries, particularly the European ones, needed many
centuries – the Middle Ages – to pass from the feudal state to national states. In
many cases, like Spain or France for example, their reference was the unity of the
seven centuries long Roman colonial period that joined city–states and territories
previously under a gentilician regime. It was a period that, in later colonisations
after the discovery of America or those of the 19th century, would bequeath
language, laws, religion, urbanism and infrastructures, as well as centralised
administration.
Such political immaturity – another factor of heterogeneity in the underdevel-
oped world – notably impedes the action of the state to favour development, gives
 ECONOMIC UNDERDEVELOPMENT IN THE WORLD 105

way to endemic corruption that absorbs most of the developing aid channelled by
the state, encourages capital flight and often favours the entrance of multinational
companies with unsustainable social and ecological practices.

3.2. T HE DEMOGRAPHIC FACTOR

The third factor then seriously impedes economic take-off is the demographic
factor.
Until child mortality was reduced thanks to biomedical discoveries, particularly
antibiotics in the decade of 1940s, population, natural resources and develop-
ment conditioned agricultural societies with the same mechanisms that drive the
evolution of animal societies.
As Paul Ehrlich predicted as early as 1968 in his Population Bomb, the demo-
graphic explosion in UDCs, which have seen a population increase of about
3000 million since 1960, has shattered the millenary equilibrium.
Beyond moral statements or rationalisations arguing that a high birth rate stim-
ulates development (often using insufficient empirical evidence, as is the case with
Simon (1980) or Chesnais (1987)), objectively speaking, a high birth rate is –
together with the expansion of consumerism in DC – the key to the acceleration of
the use, exploitation and degradation of natural resources and the advance of deser-
tification on a global scale, specially in arid and semiarid regions as the Sahel. It is
also clearly associated with poverty (Panayotou, 2000a) while development, in the
end, improves the ecological indicators on a country level (Panayotou, 2000b).
On the other hand the cost of health care and education of the huge youth pop-
ulation that characterises the demographic pyramids of UDCs consumes most of
the public resources. Also, the production system is unable to provide work for the
tremendous contingents of working age young people. This fact generates chronic
unemployment and marginality such as that seen in the Magreb and Muslim coun-
tries. This marginality and unemployment, together with the Palestinian problem,
become a true cultural medium for global terrorism. The huge labour pool leads to
very low salaries that in turn lead to a lack of stimuli for technological innovation
(Kenwood and Lougheed, 1972) and reduce the possibility of forming an internal
market above the mere subsistence level.
Bloom et al. (1999) have shown how ‘The demographic transition can act both
as a catalyst and as an accelerating mechanism (of economic growth), and that
demographic effects can explain most of East Asia’s economic “miracle” ’.
As an example of a opposing situation, one could point to the demographic
growth achieved during the First Industrial Revolution (1765–1885) – the age of
proletarians – which did not stop development in Europe. Today the situation is not
the same because the development process in the 19th century – labour intensive
due to the level of technological development, as opposed to current development
levels – and the possibilities opened up by migration by the colonisation of new
lands (in Spain from 1880 to 1914 one-fifth of the total population migrated to
America) which were able to absorb most of the new contingents.
106 F.J. AYALA-CARCEDO AND M.R. Y GONZ ÁLEZ-BARROS
50
45

BIRTH RATE 2001 (o/oo)

40
35
30
y = 117,42x-0,2404
25
R2 = 0,6667
20
15
10
5
0
0 10000 20000 30000 40000
PER CAPITA INCOME 1999 (US $ )

Figure 6. Up until ∼1500 US$ of PCI there is a potential inverse correlation of the birth rate with the PCI strongly
decreasing with the increase of income. The higher birth rates of the LDC result from the lack of development
through cultural paths such as securing the old age or the lack of modern family planning. Reconducting the
demographic boom implies the development of the less favoured countries.

As Figure 6 shows, the PCI and the birth rate are inversely related. This is
another of the Gordian knots of economic growth.
We can only deduce that the solution to the problem of the demographic
boom appear over the course of the development process and that an effective
development policy is the best solution to the demographic problem.

3.3. L AND PROPERTY

Another social factor that continues to condition the possibility of a take-off in

other countries, particularly Latin-American ones, is the concentration of land
property in the hands of a few.
This is one of the causes of the impoverishment generated by the wars that
have ravaged or are ravaging in countries like Guatemala, Salvador, Nicaragua,
Colombia. These conflicts were caused by a combination of the demographic boom
and the concentration of land property in just a few hands. Land property concen-
tration also means a handicap for the creation of an internal market, one of the
prerequisites for economic take-off.
Agricultural Reform is not only many times an act of justice, but a condition
for development and peace. Nevertheless, if ecological characteristics and socio-
economic factors not taken into account, agricultural modernisation might fail
(Sachs, 2000).
Landowner economies, like the Spanish economy up until well into the
20th century, or the Southern US states, or that which was left by the colonial
Spanish and Portuguese presence in America, in contrast with the farmers of the
 ECONOMIC UNDERDEVELOPMENT IN THE WORLD 107

American East Coast, did not favour economic growth, but quite the opposite being
the case (Kenwood and Lougheed, 1972). The reason lies in landowners’ defence
of the free trade (raw materials and agricultural products in exchange for manufac-
tured goods) and the maintenance of very low salaries in expanding demographic
contexts such as that of the 19th century. These factors hamper the creation of
an internal mass market. The struggle between two opposing development mod-
els regarding the future of the West was at the heart of the North American Civil
War between the free trading Southern landowners and the protectionist Northern
industrialists and farmers. If the South had triumphed, today the USA might only
be slightly ahead of Brazil in terms of development.

3.4. OTHER FACTORS

Another factor that progressively impedes economic take-off is the overexploita-

tion and degradation of natural resources, actions which are closely related
with the previous factor (Ehrlich, 1968; Campbell, 1983). The advance of
desertification – the process of degradation of land fertility resulting from defor-
estation, erosion, increased salinity, overexploitation of groundwater and the
ongoing climatic change itself – is a real worry in dry countries and, together
with the demographic explosion (which has led to progressively lower ratios of
labour land per capita) and the semidepletion of the Green Revolution, paints a
grim panorama for those UDCs, mainly African, with the dimmest prospects for
development.
The last backlogging factor is underdevelopment itself, a reality that leads
to something similar to what Franck (1966) called the development of
underdevelopment.
Today things are quite different from the situation in the last quarter of the
19th century. At that time economic nationalism was linked to the construction of
the first national markets, thanks to the telegraph, the railway and to a growing pro-
tectionism (which was the predominant phenomenon among the countries which
had taken the road to the industrial development) and had qualitatively similar
degrees of development.
The techno-economic imbalance existing today between developed and UDCs,
the amount of which varies among the developing globalised countries (DPGCs),
is huge, and protectionism, at a level similar to that of the 1890–1939 period, today
is unviable and negative. It is not really that, structurally, the continuity of develop-
ment needs to keep most of the world’s population in a state of underdevelopment,
simply the situation is radically different – and much more severely adverse – for
those countries which would like to spur development.
It is the world market itself – with Adam Smith’s idea of an ‘invisible hand’ whose
total substitution or elimination nobody would dare to propose (although it might
be adjusted to cover by the State goods or services not produced by the market) –
and dissimilar development, which is in charge of prolonging this state of affairs.
108 F.J. AYALA-CARCEDO AND M.R. Y GONZ ÁLEZ-BARROS
Related with this subject is the way part of the UDC incorporate themselves into
the world market: hyper-specialisation, the monoculture of export products often
pushed by multinationals with headquarters in the DC. This fact – the monoculture
of bananas, soy, peanuts or some mineral – makes these raw materials producing
economies very vulnerable to a fall in prices, as cocoa or peanut in Western
Africa.
We must point out that high cash reserves in DC is a favourable factor. But
due to the unfeasibility of many of the projects generally considered sapped by
endemic corruption in politically immature countries, this advantage has become,
in many cases, a trap ensnaring their potential in external debt. In 2000, the annual
payments to service debt were 0.25 billion euros; the annual aid to development
was 0.05 billion euros.
On the other hand the current international economic environment, with the
USA, the EU and Japan simultaneously immersed in a crisis for the first time since
World War II and facing the very real possibility of deflation (Stiglitz, 2002), it is
not the best environment for the poor countries. The relative failure of the 2002
Johannesburg and Monterrey Summits on Sustainable Development to finance
development only confirm this prognosis.
The possibilities of building a ‘peace economy’ based on the huge expenditures
in weapons theoretically freed up by the end of the Cold War in 1990, have com-
pletely vanished, because of the September 2001 New York terrorist attack, the
consequent new war problems in Middle East and the cancer of the long conflict
in Palestine. Today the USA’s wars and post-war rebuilding in Afghanistan and
Iraq make a financial development model based on a reduction on the military
expenditure a less and less likely possibility; Samuelson (2003) has pointed out
that strong deterioration in the US balance of trade under the Bush Administra-
tion (from 191 billion USD in 1996 to 485 USD billion in 2002), mainly caused
by these wars may trigger a catastrophic contraction in world trade. A new ‘peace
economy’ had open the possibility to supply budgets for a general plan in the UC
against famine and for education, health, water supply – a basic component for a
new agriculture, more productive – and infrastructures for transports and informa-
tion, all basic needs for the take-off. But USA has chosen the war and the European
Union has chosen itself.

4. Opportunities for and obstacles to an economic take-off

in a globalised world

In today’s relatively globalised world, that is, with a relatively liberalised flow of
goods – except agricultural – services and capital, the latter will tend to move look-
ing for the best opportunities, which could be where the other production factors
(land, natural resources and work) provide more opportunities for profit. A review
of the growth rate of the GPD/inhabitant in the last four decades shows a decline
in that rate in DCs, whilst in DPGCs (mostly ADC) that rate grows. In particular,
 ECONOMIC UNDERDEVELOPMENT IN THE WORLD 109

these are countries which have opened their economies and have an interchange
potential, the so-called globalised countries, using the terminology of the World
Bank (Dollar and Kray, 2001). This liberal economic approach to the problem
must be balanced with the possible negative effects at social or environmental level
(Bermejo, 1998).
The abundance of natural resources in some UDCs is thus one of the pos-
sibilities. Whether they are fishing resources (Chile, Morocco, Namibia), agri-
cultural resources (Argentina), wood (Brazil, Thailand, Indonesia), oil and gas
(Gulf countries, Indonesia, Venezuela, Russia) or minerals (Chile, South Africa,
China, Russia), the possibilities presented by both trough exports – particu-
larly if transformed – or their usage by the production system, are undeniable.
Nevertheless, the fragility of the natural ecosystems, many times strained, or the
date of depletion of the mineral resources, might end up representing excessive
costs or real traps or obstacles – similar to the monocultures commented above –
to agriculture that produces more than internal demand requires, which as seen in
many occasions is essential for economic take-off. Abramovitz (1996) has pointed
out the negative ecological impacts of large dams. Wellmer and Becker-Platen
(2002) have analysed the conditions for sustainability in the exploitation of mineral
and energy resources.
The land use for toxic and hazardous wastes coming from DC in countries with a
poor environmental legislation is a false opportunity. Some countries like Russia –
with the most damaging nuclear accident, Chernobyl – has to offer its land for
radioactive wastes reservoirs. WTO might develop clear controls in international
transfer to avoid environmental dumping.
The low price of another production factor, labour, fruit of the underdevelop-
ment itself, is another element of opportunity, although from the point of view
of national production might be – as stated before – a handicap for technological
innovation. Textile manufacture, carried out today mostly in UDCs – some times
using children as the labour force – or electronic components assembly, are two
examples of the influence of this factor, as is the transfer of some car assembly
plants from Western to Eastern Europe. Nevertheless, the qualification of the work
factor is very uneven in the underdeveloped world.
Figure 7 suggests a poor relationship between the unemployment rate and the
economic level. Although it is true that unemployment has grown substantially
in European countries, underground unemployment or subemployment seems to
be significantly lower than in the LDC. Unemployment grew in the EU due to
the technological reconversion of the last decades and lacking of interest in low
wages works, and in the Eastern European countries due to the collapse of the
overprotected systems which characterised State capitalism.
Linked to this fact and to the demographic boom is the role played by emigration
to the DC. Although it deprives UDC of good workers – many times the best
workers – which in many instances would be unemployed, and entails undoubted
social costs, it is also a source of income for the families that stimulates UDCs
110 F.J. AYALA-CARCEDO AND M.R. Y GONZ ÁLEZ-BARROS

Figure 7. The unemployment rate shows a poor inverse correlation with the PCI, existing a wide span for the
same income, higher – in any case – than that existing in developed countries. The correlation might probably
improve once corrected with the undercover unemployment as this is very important in the hyper-sized services
sector in UDCs.

by means of the amounts sent by emigrants and the corresponding foreign cur-
rency income. This factor had an important influence on the Spanish take-off of
the 1960s, thanks to two million (more than 10% of the work force) emigrants
(Tamames, 1986). Foreign currency allowed the acquisition of industrial equip-
ment. In Mexico, emigration today comprises 1.7% of the GDP and in Morocco is
the main source of foreign currency. On the other hand, emigration also means –
because of the emigrants that return temporarily or permanently home – a flow
of new ideas of all sorts that might help in the economic, social and political
transformation.
With regard to autochthonous development, there is an abundance of cash
in the DCs that can form a pool of capital for enterprises. Low interest rates
(1.25% in the USA and 2% in the EU at the end of 2003) is a clear indicator
of this fact. As the lack of capital might be the main obstacle for the take-off, its
importance should not be minimised.
The lack of transport infrastructures might be somehow substituted by one of
the possibilities that the information society opens up: the substitution of the
transportation of people and goods by the instant transportation of information,
which is much cheaper. It is for this reason that one of the priorities of any eco-
nomic development initiative in the underdeveloped world should be the creation
of infrastructures and digital networks with their corresponding PCs. A task that
could be handled by Non-Government Organisations by recycling used PCs from
DCs. We must point out in this sense the huge inequality existing between UDCs
and DCs and the facilities offered to good computer experts to emigrate. However,
 ECONOMIC UNDERDEVELOPMENT IN THE WORLD 111

the success of countries like India with the digital city of Bangalore, which sup-
plies software to the most advanced countries, is notable. Nevertheless the need
for literacy in computers, when there are still huge pockets of traditional illiteracy,
represents a difficult challenge to overcome for the poorest countries and a new
factor that will increase internal and external inequality. One of the main problems
for UC in this way is the high cost of software with copyright. From Brazil and
informatic-NGOs is now promoted a movement for the use of free software like
Linux by government and individuals.
One of the natural/cultural resources that today represents a real opportunity in
several countries is land. Land, sometimes with virgin areas, is an opportunity for
the development of tourism – as it was and still is in Spain – whose volume does
not stop growing in DCs (in Spain today it represents 9% of the family expendi-
ture and the tourism sector is 13% GDP, the second industry after cars), and it is
more and more oriented to places previously considered exotic. Its importance for
the Caribbean, Brazil, North Africa, Egypt, India or the Far East is obvious. This
opportunity needs a sustained effort in the UDC for natural and cultural heritage
conservation, an effort in the way of sustainable development. The evolution of this
opportunity will depend nonetheless on the economic recovery of the rich coun-
tries and enhance the need for UDCs to conserve natural resources, an opportunity
for Sustainable Development.
Another opportunity, currently more theoretical than real, only for several coun-
tries with competitive agriculture, especially after the failure of the 2003 World
Trade Organisation (WTO) summit in Cancun – with the permanent support of
DPGCs and the World Bank, is the potential liberalisation of the agrarian market,
promoted by the WTO, particularly in Europe, one of the less liberalised trade
zones. The new protectionist impulse in agriculture of the Bush Administration in
the USA does not offer a favourable forecast in the short term. In the EU, the latest

Figure 8. The forecasted evolution of the world population, characterised – as a whole – by the demographic
boom, higher with less development, seems to suggest a drop that will contribute to a more balanced growth,
particularly in LDC which in turn will see their development problems reduced.
112 F.J. AYALA-CARCEDO AND M.R. Y GONZ ÁLEZ-BARROS
proposals of President Prodi to reduce in a substantial way the weight of agricul-
ture in the Union budget is a hope for UCs. But the current size of this opportunity
is limited because today 45% of international trade of agricultural commodities
is the internal trade of multinational enterprises. For many poor countries, the
achievement of subsistence agriculture is a more important target to eradicate
famine.
There is general agreement about the repeated failures of WTO summits since
the 1999 Seattle meeting. The possible temptations of a return from multilateral
trade agreements to bilateral trade may be a big threat to world development.
In any event, the demographic forecasts for the current century, as shown in
Figure 8, point to a slowdown in growth and to UDCs entering more frequently
into demographic transitions (Livi-Bacci, 1989), which will probably translate into
an improvement in the economic growth (Bloom et al., 1999).
The evolution of the UN Index of Poverty shows, at a world level, a slight
decrease from 1987 (28.3%) to 1998 (24%), but the economic gap between the
richest countries and the poorest is today two times greater than 40 years ago.
This fact suggests improvement is not homogeneous, and the relative problem
of poorest countries is growing. Therefore, the Development Aid coming from
more developed countries and international institutions is completely necessary
for the poorest countries but is less important with respect to the liberalisation of
the agrarian markets or freights for somewhat more developed countries.
Figure 9 suggests that the expectation that Development Aid is being sent to the
poorest countries not be borne out in reality and, rather, aid decisions may be made
on the basis of factors of a cultural nature – same language – or to relations with

Figure 9. The poor correlation between PCI and official aid to development suggest the unclear rationality of
such aid with regard to objective distribution criteria.
 ECONOMIC UNDERDEVELOPMENT IN THE WORLD 113

former metropolis or areas of geopolitical influence, which interfere with develop-

ment priorities and suggest that there should be more UN intervention for a more
just allocation of aid: more for poorest countries.
To summarise, a very important part of the opportunities are currently blocked
for many countries, in part by the current economic situation, in part by the fail-
ure of hopes about a new ‘peace economy’, in part by structural reasons. This is
negative for the hopes of a progressively bigger part of the human population and
for the protection of the environment in poorest countries. These opportunities will
probably be not enough for many of the poorest countries with severe obstacles to
growth; therefore, a sustained program of international aid rationally distributed
will be necessary.

5. Conclusions

At a world level, underdevelopment is the 21st century’s main challenge and the
main cause of geopolitical problems.
Probably, history’s main development problem is that economic development
preceded social development, and this in turn preceded ecological sustainabil-
ity. Today things are quite different from the situation in the last quarter of the
19th century.
Underdevelopment is a very heterogeneous world and there is not a general
model for development.
The ecological and social priorities of the UDCs, which represent most of the
world, will be subordinate in practice to economic priorities.
Nature, in terms of the land available for every community, does not provide,
historically, the same opportunities for all. For example, favourable ecological
conditions (presence of wild agricultural vegetables and domesticated animals, a
not too arid climate) played an almost decisive role in the earliest emergence of
agriculture and cattle.
Until 150 years ago the economic base of most of the world’s population was
agrarian and that fact defined the initial conditions for economic take-off, and
to obtain consecutive developing advantages that history has been decisive. This
and not a racial or cultural reason is the main and necessary primary cause of
the Euro American economic, political and cultural hegemony. In this way, it is
necessary to give priority to agricultural development.
Empirical studies show GDP per capita and the spatial density of economic
activity measured as GDP per km2 are high in temperate ecozones, regions with
mineral resources and in regions close to the sea or navigable rivers.
The main socio-economic internal problems for growth are political imma-
turity, the demographic factor, land property concentrated in a few hands and
the socio-economic vulnerability coming from ‘monoculture’ of agricultural or
mineral resources and the external debt.
114 F.J. AYALA-CARCEDO AND M.R. Y GONZ ÁLEZ-BARROS
The main socio-economic external problems might be the deflation possibili-
ties in developed countries, the temptations of a return to bilateral trade after the
repeated failure of WTO summits and the expansion of the USA’s wars that may
trigger a catastrophic contraction in world trade.
The main opportunities for take-off in a globalised world, very different
according to the different countries, may come from the general trend towards
liberalisation, the abundance of natural resources, the possibilities for the devel-
opment of tourism, the availability of cash at low interest rates in the DCs that
might mean capital for enterprises, the increasing possibilities for emigration to
DCs, the low price of another production factor, labour, the possibilities that
the information society provides: the substitution of the transportation of peo-
ple and goods by the much cheaper instant transportation of information. These
opportunities are probably not enough for many of the poorest countries with
severe obstacles to economic take-off; therefore, a sustained program of rationally
distributed international aid will be necessary: more per capita aid for poorest
countries.

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