Sketch of the Social Framework of an Underdeveloped Economy

Abstract

Underdeveloped countries may be grouped according to various points of view. Sometimes one factor of production is taken in relation to another, for instance land and labour, resulting in a distinction between the densely settled Asiatic and the sparsely populated South American countries. This distinction more or less coincides with that which takes as criterion the importance of foreign trade for the economy. The South and Central American countries are characterized as: ‘Export-economies’, ‘monoexport economies’, ¹ and ‘reflex economies’. ² In these countries foreign trade dominates the economy, whereas it is of far less relative importance for the Asiatic countries. ³ There is also a striking ecological difference between the peoples of the two groups. Whereas the Latin American countries are very strongly orientated towards the U.S.A. and Western Europe, and the ‘demonstration effect’ is manifest, the same cannot be said of the highly tradition-bound Asiatic societies. Finally, there is a great difference in the politico-economic machinery used in these countries to achieve rapid economic growth. Following the example of the Soviet Union, ‘Planwirtschaft’ is widely applied in the East, whereas this type of economic order has so far been alien to Latin American countries.