The common characteristics of third world countries, or LDCs (Least Developed Countries) as they are frequently referred to today, are highly dependent and distorted economies; rural, traditional structures and high rates of population growth, as well as wide spread poverty.
There is, however, a sharp contrast in the third world, because countries on varying levels of development are included. In addition, in spite of urban shanty towns and rural poverty, the elite few ruling the majority of third world countries manage to be extremely wealthy.
- Absorption Into Capitalist Economy
This contrasting combination of conditions and circumstances in Africa, Asia, Latin America and Oceania is directly linked to the swallowing up of third world countries through either indirect domination or direct conquest into the capitalist Western economy.
The creation of the first world market in history was the most significant result of Western domination. The setting up of sub-economies linked to Western companies throughout the countries of the third world, combined with the introduction of various modern institutions, disrupted traditional societies and economies, leading to underdevelopment.
The economies of most underdeveloped countries are geared to serve the needs of the industrialized Western countries. They often consist of no more than a handful of modern economic activities, like cultivation of crops in plantations and mining, for instance.
Frequently these limited activities remain under the control of large foreign companies. Trade with the Western world provides nearly all of third world income. Prices of products are determined by the large buyers within the economically dominant countries.
Severe exploitation during the colonial period left little capital to develop even after decolonization. Deterioration of terms of trade, a relation between cost of required imports and income from exports, further helped to worsen the economic position of third world countries.
