According to a report by the World Bank, malnutrition is now costing poor countries as much as 3% of their annual economic output and is stunting economic development.
The report says malnutrition, and not just a lack of food, is a root cause of child mortality and makes people more vulnerable to fatal diseases such as malaria and HIV/AIDS.
Figures show that almost half of the children in India where the economy is booming, are undernourished, compared with a quarter of those in sub-Saharan Africa.
The report, entitled "Repositioning Nutrition as Central to Development", says malnourished children are at risk of losing up to 10 percent of lifetime earnings and are more prone to HIV infection.
Jean-Louis Sarbib, the World Bank's senior vice president for human development,says that poor nutrition is implicated in more than half of all child deaths worldwide - a proportion unmatched by any infectious diseases since the Black Death.
The authors blame international development groups and institutions, as well as developing country governments, for failing for decades to tackle malnutrition and is urging that nutrition be placed at the center of development.
Sarbib says that as many as 60 percent of children who die from diseases such as diarrhea and malaria may have survived had they not been malnourished.
Sarbib says though it is intimately linked with poor health and environmental factors, policymakers, politicians and economists often fail to recognize these connections.
The report says improving nutrition could add 2 percent to 3 percent a year to a poor nations' gross domestic product, as children would be less likely to drop out of school, and would absorb more education and boost their future income potential.
The report urges aid donors and development agencies to use their combined resources of aid, analysis and advocacy to persuade governments to move nutrition up the agenda, and says present funding for nutrition programs is inadequate.
It has urged the development community to co-finance a grant fund that would complement a recent $3.6 million World Bank grant to boost understanding and research of nutrition in maternal and child health programs.
Initial estimates suggested the costs to address micronutrient deficiencies in Africa was about $235 million, but it said more comprehensive global vitamin and iodized salt programs would likely cost more than $1 billion a year.
The World Bank experts say that malnutrition was not simply a result of having too little food and many children who had enough to eat were still underweight or stunted because of misguided infant feeding and care practices or poor sanitation and access to health care.