Many developing countries share the difficult problem of attempting to provide aid to the large sectors of their population living at or near a minimal subsistence level. These subsistence sectors are often characterized by their traditional orientation and their relative isolation from the commercial or modern sectors of the developing nation's economy. This isolation does not always entail physical remoteness of traditional enclaves, although spatial imbalances and disparities are frequent concomitants of functional dislocation within the economy. The maintenance of separate institutions governing social and economic relationships, and the persistence of patterns of motivation and behavior at variance with modern modes of reasoning, are frequently sufficient to impede contact between closely contiguous groups of traditional and commercially oriented peoples.

Thus although development may be theoretically possible for any group, and is often conceptualized as a continuum between low and high states of productivity and welfare, in some countries a pronounced dichotomy arises between traditional and modern groups. Economies in which functional separation of subsistence and commercial sectors has become acute are referred to as dual economies.