Developing country

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A developing country, also called a less-developed country (LDC),[1] is a nation with a low living standard, underdeveloped industrial base, and low Human Development Index (HDI) relative to other countries.[2][3] There is no universal, agreed-upon criteria for what makes a country developing versus developed, and which countries fit these two categories, although there are general reference points such as the size of a nation's GDP compared to other nations.

Countries with more advanced economies than other developing nations, but have not yet demonstrated signs of a developed country, are often categorized under the term newly industrialized countries.[4][5][6][7]

Contents

[edit] Definition

Kofi Annan, former Secretary General of the United Nations, defined a developed country as follows. "A developed country is one that allows all its citizens to enjoy a free and healthy life in a safe environment."[8] 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]

And it notes that

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.[9]

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 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 eastern 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 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."[10]

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:[11]

  • 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."[11]

[edit] Measure and concept of development

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, 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.

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 correlation 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.

The "BRIC" countries, Brazil, Russia, India, and China are difficult to categorize because of their rapid economic development in recent years. However, they are still not developed countries.

[edit] Criticism of the term 'developing country'

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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.[12]

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 of that has been suggested is that of Gross national happiness. Measuring the actual satisfaction of people as opposed to how money orientated a country is.

[edit] List of developing economies

The following are considered developing economies according to the International Monetary Fund's World Economic Outlook Report, April 2012 and World Bank data [13].[14]

Developing countries not listed by IMF

[edit] List of graduated developing economies

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 International Monetary Fund:

[edit] Typology and names of countries

Countries are often loosely placed into four categories of development. Each category includes the countries listed in their respective article. The term "developing nation" is not a label to assign a specific, similar type of problem.

  1. Newly industrialized countries (NICs) are nations with economies more advanced and developed than those in the developing world, but not yet with the full signs of a developed country.[4][5][6][7] NIC is a category between developed and developing countries. It includes Brazil, China, India, Indonesia,[23] Malaysia, Mexico, Philippines, South Africa, Thailand and Turkey.
  2. The Advanced Emerging Markets are:[24] Brazil, Hungary, Malaysia, Mexico, Poland, South Africa, Taiwan and Turkey.
  3. Countries with long-term civil war or large-scale breakdown of rule of law ("failed states") (e.g. Democratic Republic of Congo, Afghanistan, Somalia) or non-development-oriented dictatorship (North Korea, Myanmar and Zimbabwe).
  4. Some developing countries such as Antigua and Barbuda, Bahamas, Barbados, Brunei, Equatorial Guinea, Trinidad and Tobago and the Arab states of the Persian Gulf have been classified as "Developed countries" by the World Bank.

[edit] See also

[edit] References

  1. ^ Financial Dictionary http://financial-dictionary.thefreedictionary.com/lesauthor=Farlex Financial Dictionary
  2. ^ 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. 
  3. ^ a b c "Composition of macro geographical (continental) regions, geographical sub-regions, and selected economic and other groupings (footnote C)". United Nations Statistics Division. revised 17 October 2008. Retrieved 2008-12-30. 
  4. ^ a b Paweł Bożyk (2006). "Newly Industrialized Countries". Globalization and the Transformation of Foreign Economic Policy. Ashgate Publishing, Ltd. ISBN 0-7546-4638-6. 
  5. ^ a b Mauro F. Guillén (2003). "Multinationals, Ideology, and Organized Labor". The Limits of Convergence. Princeton University Press. ISBN 0-691-11633-4. 
  6. ^ a b Waugh, David (3rd edition 2000). "Manufacturing industries (chapter 19), World development (chapter 22)". Geography, An Integrated Approach. Nelson Thornes Ltd. pp. 563, 576–579, 633, and 640. ISBN 0-17-444706-X. 
  7. ^ a b Mankiw, N. Gregory (4th Edition 2007). Principles of Economics. ISBN 0-324-22472-9. 
  8. ^ G_05_00http://en.wikipedia.org/w/index.php?title=Developing_country&action=edit&section=1#
  9. ^ United Nations Statistics Division- Standard Country and Area Codes Classifications (M49)
  10. ^ "Q. How does the WEO categorize advanced versus emerging and developing economies?". International Monetary Fund. Retrieved July 20, 2009. 
  11. ^ a b "How we Classify Countries". World Bank. Retrieved September 25, 2010. 
  12. ^ Karma Ura. "The Bhutanese development story". Retrieved 17 September 2012. 
  13. ^ http://data.worldbank.org/region/ECA
  14. ^ IMF Advanced Economies List. World Economic Outlook, April 2012, p. 179
  15. ^ a b c World Economic Outlook, International Monetary Fund, April 2009, second paragraph, lines 9–11.
  16. ^ IMF Advanced Economies List. World Economic Outlook, May 1998, p. 134
  17. ^ World Economic Outlook, April 2001, p.157
  18. ^ World Economic Outlook, April 2007, p.204
  19. ^ World Economic Outlook, April 2008, p.236
  20. ^ World Economic Outlook, April 2009, p.184
  21. ^ World Economic Outlook, April 2011, p.172
  22. ^ World Economic Outlook, October 2012, p.180
  23. ^ http://econ.worldbank.org/external/default/main?pagePK=64165259&theSitePK=469372&piPK=64165421&menuPK=64166093&entityID=000009265_3970716142516
  24. ^ http://www.ftse.com/Indices/FTSE_Emerging_Markets/index.jsp.

[edit] External links

Library resources
About Developing country
Economic classification of countries
Three Worlds Theory
Gross domestic product (GDP)
Gross national income (GNI)
Wages
Other national accounts
Human development
Digital divide
Net international investment position (NIIP)

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