Underdevelopment from the viewpoint of these theories is the result of vicious circles of factors. One example is based on the fact of low real income in developing countries which is the result of low labour productivity. This low labour productivity, in turn, is a consequence of capital shortage which is a result of the population's low saving ability. As the saving rate is determined by the low real income, the circle is closed.

Strategy theories intend to break up this cycle at a certain point which they consider critical and which varies according to the different theories. Thus, they want to initiate development and transform traditional subsistence economy into a modern market economy. Their main emphasis is on capital formation and investment (investment theories) and, by and large, they prescribe action for overcoming underdevelop-ment while they contribute little towards explaining the causes of underdevelopment.