Developing economies according to the IMF
Developing economies out of scope of the IMF
The UN acknowledges that it has "no established convention for the designation of "developed" and "developing" countries or areas". According to its so-called M49 standards, published in 1999:
The designations "developed" and "developing" are intended for statistical convenience and do not necessarily express a judgement about the stage reached by a particular country or area in the development process.
The UN implies that developing countries are those not on a tightly defined list of developed countries:
There is no established convention for the designation of "developed" and "developing" countries or areas in the United Nations system. 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 [the former Soviet Union] in Europe are not included under either developed or developing regions.
However, under other criteria, some countries are at an intermediate stage of development, or, as the International Monetary Fund (IMF) put it, following the fall of the Soviet Union, "countries in transition": all those of Central and Eastern Europe (including Central European countries that still belonged to the "Eastern Europe Group" in the UN institutions); the former Soviet Union (USSR) countries in Central Asia (Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan and Turkmenistan); and Mongolia. By 2009, the IMF's World Economic Outlook classified countries as advanced, emerging, or developing, depending on "(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"
Along with the current level of development, countries can also be classified by how much their level of development has changed over a specific period of time.
In the 2016 edition of its World Development Indicators, the World Bank made a decision to no longer distinguish between “developed” and “developing” countries in the presentation of its data, considering the two-category distinction outdated. Instead, the World Bank classifies countries into four groups, based on Gross National Income per capita, re-set each year on July 1. In 2016, the four categories in US dollars were:
- Low income countries: $1,025 or less.
- Lower middle income countries: $1,026 to $4,035.
- Upper middle income countries: $4,036 to $12,236.
- High income countries: $12,237 and above
Measure and concept of development
Least developed economies according to ECOSOC
Least developed economies out of scope of the ECOSOC
Newly industrialized countries as of 2013 .
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".
Development can be measured by economic or human factors. 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 an association between low income and high population growth. The development of a country is measured with statistical indexes such as income per capita (per person), gross domestic product per capita, life expectancy, the rate of literacy, freedom index and others. The UN has developed the Human Development Index (HDI), a compound indicator of some of the above statistics, to gauge the level of human development for countries where data is available. The UN had set Millennium Development Goals from a blueprint developed by all of the world's countries and leading development institutions, in order to evaluate growth. These goals ended in 2015, to be superseded by the Sustainable Development Goals.
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, modernization, social change 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 (manufacturing) have grown substantially. Similarly countries with a tertiary sector stronghold also see a greater rate of economic development.
Terms used to classify levels of development
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.
Developing countries can also be categorized by geography:
Other classifications include:
- Heavily indebted poor countries, a definition by a program of the IMF and World Bank
- Transition economy, moving from a centrally planned to market-driven economy
- Multi-dimensional clustering system: with the understanding that different countries have different development priorities and levels of access to resources and institutional capacities and to offer a more nuanced understanding of developing countries and their characteristics, scholars have categorised them into five distinct groups based on factors such as levels of poverty and inequality, productivity and innovation, political constraints and dependence on external flows.
Criticisms and other terms
There is criticism for using the term "developing country". The term could imply inferiority of this kind of country compared with a developed country. It could assume 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. Alternative measurements such as gross national happiness have been suggested as important indicators.
The classification of countries as "developing" implies that other countries are developed. This bipartite division is contentious.
To moderate the euphemistic aspect of the word "developing", international organizations have started to use the term less economically developed country for the poorest nations—which can, in no sense, be regarded as developing. This highlights that the standard of living across the entire developing world varies greatly. Other terms sometimes used are less developed countries, underdeveloped nations, and non-industrialized nations. Conversely, developed countries, most economically developed countries, industrialized nations are the opposite end of the spectrum.
Over the past few decades since the fall of the Soviet Union and the end of the Cold War, the term Third World has been used interchangeably with developing countries, but the concept has become outdated in recent years as it no longer represents the current political or economic state of the world. The three-world model arose during the Cold War to define countries aligned with NATO (the First World), the Communist Bloc (the Second World, although this term was less used), or neither (the Third World). Strictly speaking, "Third World" was a political, rather than an economic, grouping.
The term "Global South" began to be used more widely since about 2004. It can also include poorer "southern" regions of wealthy "northern" countries. The Global South refers to these countries' "interconnected histories of colonialism, neo-imperialism, and differential economic and social change through which large inequalities in living standards, life expectancy, and access to resources are maintained".