World Development Report, 2004 categorizes countries having less than $735 per capital income as developing economy.

The features of the developing economy are as follows:

(i) Low per capita income: The per capita income in the developing countries is low. Their lesser national income gets divided by a larger population. As a result, the standard of living is poor.

(ii) Higher population growth rate: The population growth rate per annum is 2% or more in these countries. There is pressure of population on the natural resources such as land.

(iii) Agrarian economy: The principal economic activity in these countries is agriculture. More than 60% of the total population is engaged in agriculture. The contribution of agriculture to the national income is about 26%.

(iv) Uneven distribution of income: There is concentration of wealth and income. 20% rich account for 40% of the national income. On the other hand, the poorest 20% account for about 10% of the national income. Disparity in income between the rural and urban areas is another indication of the uneven distribution of income.

(v) Unemployment: The ratio of unemployment is more than 3% of the entire labour force. There is seasonal unemployment and disguised unemployment in the rural areas. Industrial unemployment exists in the urban areas.

(vi) Poverty: About one-third of the population lives in dire poverty. They are unable to satisfy their basic needs of food, clothing, shelter, education and health.

(vii) Dual economy: In these countries, backward village economy and traditional society exists side by side with the modem urban economy.

(viii) Inadequate infrastructure: Means of transport and communication, education and health and banking facilities are inadequate. This hampers economic development.

(ix) Adverse balance of trade: These countries export agro products. Their income from exports is less than expenditure on imports. Due to adverse balance of trade their foreign debt goes on increasing.