A developing country (or a low and middle income country (LMIC), less developed country, less economically developed country (LEDC), or underdeveloped country) is a country with a less developed industrial base and a low Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreement on which countries fit this category. A nation's GDP per capita compared with other nations can also be a reference point.
The term "developing" describes a currently observed situation and not a changing dynamic or expected direction of progress. Since the late 1990s, developing countries tended to demonstrate higher growth rates than developed countries. Developing countries include, in decreasing order of economic growth or size of the capital market: newly industrialized countries, emerging markets, frontier markets, Least Developed Countries. Therefore, the least developed countries are the poorest of the developing countries.
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:
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.
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.
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.
At the development level, anthropologist and researcher Jason Hickel has challenged the widely propagated narrative that the rich countries of the OECD help the poor countries develop their ecocomies and eradicate poverty. Hickel's findings reveal that the rich countries "aren’t developing poor countries; poor countries are developing rich ones."
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".
One of the early criticism that questioned the use of the terms 'developing' and 'underdeveloped' countries, but one that did not confine itself to the economic sphere, was made by prominent historian and academic Walter Rodney:
In some quarters, it has often been thought wise to substitute the term ‘developing’ for ‘underdeveloped’. One of the reasons for so doing is to avoid any unpleasantness which may be attached to the second term, which might be interpreted as meaning underdeveloped mentally, physically, morally or in any other respect. Actually, if ‘underdevelopment’ were related to anything other than comparing economies, then the most underdeveloped country in the world would be the U.S.A, which practices external oppression on a massive scale, while internally there is a blend of exploitation, brutality, and psychiatric disorder. However, on the economic level, it is best to remain with the word ‘underdeveloped’ rather than ‘developing’, because the latter creates the impression that all the countries of Africa, Asia and Latin America are escaping from a state of economic backwardness relative to the industrial nations of the world, and that they are emancipating themselves from the relationship of exploitation. That is certainly not true, and many underdeveloped countries in Africa and elsewhere are becoming more underdeveloped in comparison with the world’s great powers, because their exploitation by the metropoles is being intensified in new ways.