Developing country

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  developing economies according to the IMF
  developing economies out of scope of the IMF
  graduated to developed economy

A developing country, also called a less-developed country, is a nation with a lower standard of living, underdeveloped industrial base, and low Human Development Index (HDI) relative to other countries.[1] On the other hand, since the late 1990s developing countries tended to demonstrate higher growth rates than the developed ones.[2] There is no universal, agreed-upon criterion for what makes a country developing versus developed and which countries fit these two categories,[3] although there are general reference points such as a nation's GDP per capita compared to other nations. Also, the general term less-developed country should not be confused with the specific least developed country.

There is criticism of the use of the term developing country. The term implies inferiority of a developing country or undeveloped country compared to a developed country, which many countries dislike. It assumes a desire to develop along the traditional Western model of economic development which a few countries, such as Cuba and Bhutan, choose not to follow.[4] An alternative measurement that has been suggested is that of gross national happiness, measuring the actual satisfaction of people as opposed to how industrialised a country is.

Countries with more advanced economies than other developing nations but that have not yet demonstrated signs of a developed country, are often categorized under the term newly industrialized countries.[5][6][7][8]

According to authors such as Walt Whitman Rostow, developing countries are in transition from traditional lifestyles towards the modern lifestyle which began in the Industrial Revolution in the 18th and 19th centuries.

Definition[edit]

World map by quartiles of Human Development Index in 2014.
  Very High
  High
  Medium
  Low
  Data unavailable

Various terms are used for whatever is not a developed country. Terms used include less developed country (LDC) or less economically developed country (LEDC), and for the more extreme, least developed country (LDC) or least economically developed country (LEDC).

Criteria for what is not a developed country can be obtained by inverting the factors that define a developed country:

  • people have lower life expectancy
  • people have less education
  • people have less money (income)

Kofi Annan, former Secretary General of the United Nations, defined a developed country as "one that allows all its citizens to enjoy a free and healthy life in a safe environment."[9] But according to the United Nations Statistics Division,

There is no established convention for the designation of "developed" and "developing" countries or areas in the United Nations system.[3]
The designations "developed" and "developing" are intended for statistical convenience and do not necessarily express a judgment about the stage reached by a particular country or area in the development process.[10]

The UN also notes,

In common practice, Japan in Asia, Canada and the United States in northern America, Australia and New Zealand in Oceania, and western Europe are considered "developed" regions or areas. In international trade statistics, the Southern African Customs Union is also treated as a developed region and Israel as a developed country; countries emerging from the former Yugoslavia are treated as developing countries; and countries of Central Europe and of the Commonwealth of Independent States (code 172) in Europe are not included under either developed or developing regions.[3]

On the other hand, according to the classification from International Monetary Fund (IMF) before April 2004, all countries of Central and Eastern Europe (including Central European countries that still belongs to the "Eastern Europe Group" in the UN institutions) as well as the former Soviet Union (USSR) countries in Central Asia (Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan and Turkmenistan) and Mongolia, were not included under either developed or developing regions, but rather were referred to as "countries in transition"; however they are now widely regarded (in the international reports) as "developing countries".

The IMF uses a flexible classification system that considers "(1) per capita income level, (2) export diversification—so oil exporters that have high per capita GDP would not make the advanced classification because around 70% of its exports are oil, and (3) degree of integration into the global financial system."[11]

The World Bank classifies countries into four income groups. These are set each year on July 1. Economies were divided according to 2011 GNI per capita using the following ranges of income:[12]

  • Low income countries had GNI per capita of US$1,026 or less.
  • Lower middle income countries had GNI per capita between US$1,026 and US$4,036.
  • Upper middle income countries had GNI per capita between US$4,036 and US$12,476.
  • High income countries had GNI above US$12,476.

The World Bank classifies all low- and middle-income countries as developing but notes, "The use of the term is convenient; it is not intended to imply that all economies in the group are experiencing similar development or that other economies have reached a preferred or final stage of development. Classification by income does not necessarily reflect development status."[12]

Along with the current level of development, countries may be classified by how much this has changed over some amount of time.[13] This may be by absolute numbers or country ranking.

  • countries that were more less-developed, and are less less-developed (also developing country)
  • countries that were less-developed, and are about the same (developing country)
  • countries that were less less-developed, and are more less-developed (developing country)

Measure and concept of development[edit]

  least developed economies according to ECOSOC
  least developed economies out of scope of the ECOSOC
  graduated to developing economy
Newly industrialized countries as of 2013.
   Developing countries that are neither part of the least developed countries, nor of the newly industrialized countries

The development of a country is measured with statistical indexes such as income per capita (per person) (gross domestic product), life expectancy, the rate of literacy (ignoring reading addiction), et cetera. The UN has developed the Human Development Index (HDI), a compound indicator of the above statistics, to gauge the level of human development for countries where data is available. The UN sets Millennium Development Goals (MDGs) from a blueprint developed by all of the world's countries and leading development institutions, in order to evaluate growth.[14]

Developing countries are, in general, countries that have not achieved a significant degree of industrialization relative to their populations, and have, in most cases, a medium to low standard of living. There is a strong association between low income and high population growth.

The terms utilized when discussing developing countries refer to the intent and to the constructs of those who utilize these terms. Other terms sometimes used are less developed countries (LDCs), least economically developed countries (LEDCs), "underdeveloped nations" or Third World nations, and "non-industrialized nations". Conversely, developed countries, most economically developed countries (MEDCs), First World nations and "industrialized nations" are the opposite end of the spectrum.

To moderate the euphemistic aspect of the word developing, international organizations have started to use the term less economically developed country (LEDCs) for the poorest nations—which can, in no sense, be regarded as developing. That is, LEDCs are the poorest subset of LDCs. This may moderate against a belief that the standard of living across the entire developing world is the same.

The concept of the developing nation is found, under one term or another, in numerous theoretical systems having diverse orientations — for example, theories of decolonization, liberation theology, Marxism, anti-imperialism, and political economy.

Another important indicator is the sectoral changes that have occurred since the stage of development of the country. On an average, countries with a 50% contribution from the Secondary sector of Manufacturing have grown substantially. Similarly countries with a tertiary Sector stronghold also see greater rate of Economic Development.

Some researchers in development economics, such as Theodore Schultz who won a Nobel Prize in 1979, have found that literate farmers in developing countries are more productive than illiterate farmers. They therefore recommend investing in human capital (education, health, etc.) as an effective tool for economic development. Others, such as Mohammed Tamim, believe that economic development is measurable in educational level from primary school to the university. They noticed that wherever the educational level is raised, the level of development is also raised. They conclude that the percentage of the schooled population is proportional to the economic growth rate and inversely proportional in the demographic growth rate. The Take-Off of Walt Whitman Rostow can start in a country if its population is completely schooled. It is therefore necessary for the organization of a worldwide education program, itself conditioned by another worldwide program of birth control and the establishment of a worldwide organization for the implementation of this development strategy.[15]

Growth of Developing Countries[edit]

The table below shows the annual percentage change of global output by region, showing that developing countries tend to demonstrate higher growth rates than the developed ones.

Region 2007 2008 2009 2010
World Output 5.4 2.9 -0.5 5.0
Advanced Economies 2.7 0.2 -3.4 3.0
Emerging and Developing Economies 8.8 6.1 2.7 7.3
Least Developed Countries 9.0 6.9 5.2 5.3


There are many factors stimulating and hindering growth. Many of the negatives can be prevented/combatted.

Factors Stimulating Growth[edit]

• Human Capital [16][17]

• Trade Policy: Countries with more restrictive policies have not grown as fast as countries with open and less distorted trade policies.[18] [19]

• Investment: Investment has a positive effect on growth. [20]

• Knowledge Gap [21]

Factors Hindering Growth[edit]

• Illness/Disease: Illness imposes high and regressive cost burdens on families in developing countries. [22]

• Malnutrition/Underdevelopment of the body and brain: More than 200 million children under five years of age in developing countries do not reach their developmental potential. [23]

• Knowledge gap [24]

• Political Instability [25]

Prevention of Negative factors[edit]

• Mobile Health Units: Costing $1.26 per patient, mobile health units help control malaria and sanitation of water. The estimated cost per infant and child death averted was $200-$250. [26]

Typology of countries[edit]

  Countries described as Advanced Economies by the IMF.

There are several terms used to classify countries into rough levels of development. Classification of any given country differs across sources, and sometimes these classifications or the specific terminology used is considered disparaging. Use of the term "market" instead of "country" usually indicates specific focus on the characteristics of the countries' capital markets as opposed to the overall economy.

Criticism of the term "developing country"[edit]

There is some criticism of the use of the term "developing country". The term implies inferiority of a "developing country" or "undeveloped country" compared to a "developed country", which many countries dislike. It is criticized for being too positive and too negative.

It assumes a desire to "develop" along the traditional Western model of economic development, which a few countries, such as Cuba and Bhutan, choose not to follow.[4]

The term "developing" implies mobility and does not acknowledge that development may be in decline or static in some countries, particularly in southern African states worst affected by HIV/AIDS. In such cases, the term "developing country" may be considered a euphemism. The term implies homogeneity between such countries, which vary widely. The term also implies homogeneity within such countries when wealth (and health) of the most and least affluent groups varies widely. Similarly, the term "developed country" incorrectly implies a lack of continuing economic development/growth in more-developed countries.

In general, development entails a modern infrastructure (both physical and institutional), and a move away from low value added sectors such as agriculture and natural resource extraction. Developed countries, in comparison, usually have economic systems based on continuous, self-sustaining economic growth in the tertiary sector of the economy and quaternary sector of the economy and high material standards of living. However, there are notable exceptions, as some countries considered developed have a significant component of primary industries in their national economies, e.g., Norway, Canada, Australia. The USA and Western Europe have a very important agricultural sector, and are major players in international agricultural markets. Also, natural resource extraction can be a very profitable industry (high value added), e.g., oil extraction.

An alternative measurement that has been suggested is that of gross national happiness, measuring the actual satisfaction of people as opposed to how fiscally wealthy a country is.

List of developing economies[edit]

The following are considered developing economies according to the International Monetary Fund's World Economic Outlook Report, April 2014 and World Bank data.[28][29]

List of graduated developing economies[edit]

The following, including Four Asian Tigers and new Euro countries, were considered developing countries until recently, and are now listed as advanced economies by the IMF:

See also[edit]

References[edit]

  1. ^ Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in Action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 471. ISBN 0-13-063085-3. 
  2. ^ Korotayev A., Zinkina J. On the structure of the present-day convergence. Campus-Wide Information Systems. Vol. 31 No. 2/3, 2014, pp. 139-152
  3. ^ a b c "Composition of macro geographical (continental) region". 
  4. ^ a b Karma Ura. "The Bhutanese development story". Retrieved 17 September 2012. 
  5. ^ Paweł Bożyk (2006). "Newly Industrialized Countries". Globalization and the Transformation of Foreign Economic Policy. Ashgate Publishing, Ltd. ISBN 0-7546-4638-6. 
  6. ^ Mauro F. Guillén (2003). "Multinationals, Ideology, and Organized Labor". The Limits of Convergence. Princeton University Press. ISBN 0-691-11633-4. 
  7. ^ Waugh, David (2000). "Manufacturing industries (chapter 19), World development (chapter 22)". Geography, An Integrated Approach (3rd ed.). Nelson Thornes Ltd. pp. 563, 576–579, 633, and 640. ISBN 0-17-444706-X. 
  8. ^ Mankiw, N. Gregory (2007). Principles of Economics (4th ed.). ISBN 0-324-22472-9. 
  9. ^ G_05_00 http://en.wikipedia.org/w/index.php?title=Developing_country&action=edit&section=1#
  10. ^ "United Nations Statistics Division- Standard Country and Area Codes Classifications (M49)". Unstats.un.org. Retrieved 2014-01-15. 
  11. ^ "Q. How does the WEO categorize advanced versus emerging and developing economies?". International Monetary Fund. Retrieved July 20, 2009. 
  12. ^ a b "How we Classify Countries". World Bank. Retrieved September 25, 2010. 
  13. ^ "Least Developed Countries Report 2012 - Unctad". 
  14. ^ http://www.un.org/millenniumgoals/
  15. ^ Mohammed Tamim, Le Spectre du tiers-monde, L'Harmattan, 2002
  16. ^ Schultz, Theodore W. 1961. "Investment in human capital." American Economic Review 51, no. 1 (March): 1-17.
  17. ^ Edwards, S. "Trade Orientation, Distortions and Growth In Developing Countries." (n.d.): n. pag. 1-37
  18. ^ Edwards, S. "Trade Orientation, Distortions and Growth In Developing Countries." (n.d.): n. pag. 1-37
  19. ^ Harrison, Ann. "Openness and Growth: A Time-series, Cross-country Analysis for Developing Countries." Journal of Development Economics 48.2 (1996): 419-47. Web.
  20. ^ Edwards, S. "Trade Orientation, Distortions and Growth In Developing Countries." (n.d.): n. pag. 1-37
  21. ^ Edwards, S. "Trade Orientation, Distortions and Growth In Developing Countries." (n.d.): n. pag. 1-37
  22. ^ Russel S. The economic burden of illness for households in developing countries: a review of studies focusing on malaria, tuberculosis, and human immunodeficiency virus/acquired immunodeficiency syndrome. Am J Trop Med Hyg 2004
  23. ^ Grantham-McGregor, Sally et al., the International Child Development Steering Group. “Developmental Potential in the First 5 Years for Children in Developing Countries.” Lancet 369.9555 (2007): 60–70. PMC. Web. 28 Nov. 2014.
  24. ^ Edwards, S. "Trade Orientation, Distortions and Growth In Developing Countries." (n.d.): n. pag. 1-37
  25. ^ Edwards, S. "Trade Orientation, Distortions and Growth In Developing Countries." (n.d.): n. pag. 1-37
  26. ^ Walsh, J., and K. Warren. "Control of Infectious Disease in Developing Countries." New England Journal of Medicine 304.1 (1981): n. pag. 967-974
  27. ^ Verspoor, Adriaan. "Pathways to Change: Improving the Quality of Education in Developing Countries. World Bank Discussion Papers 53." (n.d.):
  28. ^ Europe & Central Asia (developing only) | Data. Data.worldbank.org. Retrieved on 2013-07-12.
  29. ^ a b "World Economic Outlook, April 2014, p.160-163" (PDF). Retrieved 2014-05-21. 
  30. ^ World Economic Outlook, International Monetary Fund, April 2009, second paragraph, lines 9–11.
  31. ^ "IMF Advanced Economies List. World Economic Outlook, May 1998, p. 134" (PDF). Retrieved 2014-01-15. 
  32. ^ "World Economic Outlook, April 2001, p.157" (PDF). Retrieved 2014-01-15. 
  33. ^ "World Economic Outlook, April 2007, p.204" (PDF). Retrieved 2014-01-15. 
  34. ^ "World Economic Outlook, April 2008, p.236" (PDF). Retrieved 2014-01-15. 
  35. ^ a b "World Economic Outlook, April 2009, p.184" (PDF). Retrieved 2014-01-15. 
  36. ^ Velinger, Jan (28 February 2006). "World Bank Marks Czech Republic's Graduation to 'Developed' Status". Radio Prague. Retrieved 22 January 2007. 
  37. ^ "World Economic Outlook, April 2011, p.172" (PDF). Retrieved 2014-01-15. 
  38. ^ "World Economic Outlook, October 2012, p.180" (PDF). Retrieved 2014-01-15. 

External links[edit]