A country that has not yet reached the stage of economic development characterized by the growth of industrialization, nor a leve! of national income sufficient to yield the domestic savings required to finance the investment necessary for further growth. The attempt by developing countries to obtain significant increases in their real incomes has been frustrated by the deterioration in their terms of trade and the rapid expansion of their populations. Their trend growth of exports has been only about one half that of world trade as a whole, and this has been further reduced in real terms by the fall in their terms of trade. Many ideas have been put forward to assist these countries bridge the gap between themselves and the developed countries. Agreement was reached in 1979 to set up a common fund through U.N.C.T.A.D. to finance International Commodity Agreements for the stabilization of the markets in primary products. The average per annum growth in gross national product of the developing countries as a whole was about 5½ per cent through the 1970s. This average, however, conceals a wide divergence between countries. For instance, the G.N.P. of the East Asian countries grew by about 8 per cent per annum, whereas developing countries in Africa south of the Sahara grew by only 3 per cent per annum. Allowing for the rapid growth in population, this means that the real per capita incomes for the latter countries hardly improved.
Reference: The Penguin Dictionary of Economics, 3rd edt.