The original meaning of underdevelopment was a neutral one, simply defining the condition of poorer countries which then were called underdeveloped countries. However, this term was felt to be derogatory and has since disappeared from the international vocabulary, being replaced by the more euphemistic 'developing countries'.
As a result the term underdeveloped has assumed a specific and rather different meaning. It is now closely associated with the so-called dependency school, and it indicates a belief that in the world economy there are centrifugal forces at work, strengthening the position of the already rich core while keeping the periphery poor and in a state of permanent underdevelopment.
The chief author using and building on this term was Andre Gunder Frank (1967). Frank was also the first to speak of 'development of underdevelopment', meaning the development of a rich country/poor country or core/periphery relationship which results in the impoverishment of the poor or periphery partner.
There are a number of variants within the underdevelopment school. These range from the radical wing which identifies underdevelopment with neo- colonial relationships and is an outgrowth of Marxist thinking, to non-political or non-ideological explanations such as the principle of cumulative causation developed by Gunnar Myrdal (1956).
The principle of cumulative causation states that in the case of poor countries or poor groups a vicious circle is at work keeping them poor (for example, low income causing low savings and low investment, in turn causing low income in the next round; or low income leading to poor health leading to low productivity and low income).
By contrast, in rich countries, or among rich groups, a reverse beneficial circle enables them to go from strength to strength and to improve their condition progressively. The strict Marxian view is perhaps best represented by Rodney (1972) in How Europe Underdeveloped Africa: An indispensable component of modern underdevelopment is that it expresses a particular relationship of exploitation: namely the exploitation of one country by another.' This view logically also leads to the use of the concept in describing domestic relations within developing countries (as in relations between an urban elite and the rural poor), but in practice the term is now associated with an international context of relations between countries.
In between these two extremes are various other schools of thought explaining that the system of international trade relations has a tendency to benefit rich countries more than poor countries. The best known of these schools is the Prebisch-Singer theory according to which the terms of trade of primary products tend to deteriorate in relation to the prices of manufactured goods.