In economics, the term under-development does not mean absence of development. It refers to countries which are industrially, technologically, scientifically and economically less developed.

It is a situation whereby countries have low levels of exploitation of the potential sources, low levels of structural development, little or no up-to-date techniques of production. Such countries are often referred to as developing, underdeveloped, less developed, poor, backward, primitive, low income countries, third world countries. Most of these countries are found in Africa, Asia, Latin America.

Therefore, the term under-development is used on a comparative basis, referring to countries that are developing, but happen to be still lagging behind the rich and industrialized nations like USA, Japan, Britain, France, Canada, Germany, etc; that have already realized full potential in resource utilization and development.