What are Balance of payment problem in under developed countries?

An underdeveloped country has one or some of the following charactertics in common:

1. These countries has low reservoir of Natural Resources.

2. The economy is backward, often aggregarian economy, which many a times suffers unpredicatble natural climatic condition.

3. Low level of industrialisation.

4. Low level of employment.

5. Plagued by un-employment, under-employment, disguised unemployment.

6. Low Forex Reserve

7. Adverse Balance of Trade and Balance of Payment situation

8. Heavy borrowing from other countries. Heavy outgoing towards debt-service.

9. Dependency of Foreign Aids.

10. Interference from other countries, World Bank, IMF.

11. Existence of vicious circle of poverty.

12. Socio-economical inequality.

13. Inflation

14. Budgetory Deficit, Deficit Financing

15. Unplanned economy

A systematic approach has to be undertaken to move ahead on path of development depending upon root cause of underdevelopment. The approach can be a communist approach or capitalist approach. The approach should be such that its benefits can be made available to larger section of people. In process care has to be taken it should not harm weaker section of society.