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Developed country

A developed country or "more developed country" (MDC), is a sovereign state which has a highly developed economy relative to other nations. Most commonly the criteria for evaluating the degree of economic development is gross domestic product (GDP), the per capita income, level of industrialization, amount of widespread infrastructure and general standard of living.[1] Which criteria is to be used and which countries are classified as being developed is a contentious issue.

Developed countries have post-industrial economies, meaning the service sector provides more wealth than the industrial sector. They are contrasted with developing countries, which are in the process of industrialization, or undeveloped countries, which are pre-industrial and almost entirely agrarian. According to the International Monetary Fund, advanced economies comprise 65.8% of global nominal GDP and 52.1% of global GDP (PPP) in 2010.[2] In 2011, the ten largest advanced economies by either nominal GDP or PPP were: the United States, Japan, Germany, France, the United Kingdom, Italy, Canada, Spain, South Korea and Australia.[3]

Contents


Similar terms

Terms similar to "developed country" include "advanced country", "industrialized country", "'more developed country" (MDC), "more economically developed country" (MEDC), "Global North country", "first world country", and "post-industrial country". The term industrialized country may be somewhat ambiguous, as industrialization is an ongoing process that is hard to define. The term MEDC is one used by modern geographers to specifically describe the status of the countries referred to: more economically developed. The first industrialized country was the United Kingdom, followed by Belgium. Later it spread further to Germany, United States, France and other Western European countries. According to some economists such as Jeffrey Sachs, however, the current divide between the developed and developing world is largely a phenomenon of the 20th century.[4]

Definition and criteria

Economic criteria have tended to dominate discussions. One such criterion is income per capita; countries with high gross domestic product (GDP) per capita would thus be described as developed countries. Another economic criterion is industrialization; countries in which the tertiary and quaternary sectors of industry dominate would thus be described as developed. More recently another measure, the Human Development Index (HDI), which combines an economic measure, national income, with other measures, indices for life expectancy and education has become prominent. This criterion would define developed countries as those with a very high (HDI) rating. However, many anomalies exist when determining "developed" status by whichever measure is used.

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."[5] 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.[6]

And it notes that

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.[7]

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."[8]

Human Development Index (HDI)

World map by quartiles of Human Development Index in 2011.

The UN HDI is a statistical measure that gauges a country's level of human development. While there is a strong correlation between having a high HDI score and a prosperous economy, the UN points out that the HDI accounts for more than income or productivity. Unlike GDP per capita or per capita income, the HDI takes into account how income is turned "into education and health opportunities and therefore into higher levels of human development."

Since 1990, Norway (2001 2006, 2009 2011), Japan (1990 91 and 1993), Canada (1992 and 1994 2000) and Iceland (2007 08) have had the highest HDI score. The top 47 countries have scores ranging from 0.793 in Barbados to 0.943 in Norway.

Many countries listed by IMF or[9] CIA as "advanced" (as of 2009), possess an HDI over 0.788 (as of 2010). Many countries[10] possessing an HDI of 0.788 and over (as of 2010), are also listed by IMF or CIA as "advanced" (as of 2009). Thus, many "advanced economies" (as of 2009) are characterized by an HDI score of 0.9 or higher (as of 2007).

The latest index was released on 2 November 2011 and covers the period up to 2011. The following are the 47 countries in the top quartile and classified as possessing a "Very high human development".[11]

Rank Country HDI
New 2011 Estimates for 2011
[11]
Change compared to new 2011 data for 2010[11] New 2011 Estimates for 2011
[11]
Change compared to new 2011 data for 2010
[11]
1 0.943 0.002
2 0.929 0.002
3 0.910 0.001
4 0.910 0.002
5 0.908
6 0.908 0.001
7 0.908 0.001
8 0.905 0.001
9 0.905 0.002
10 0.904 0.003
11 0.903 0.002
12 0.901 0.002
13 (1) 0.898 0.004
14 (-1) 0.898 0.002
15 0.897 0.003
16 0.895 0.002
17 0.888 0.002
18 0.886 0.001
19 0.885 0.002
20 0.884 0.001
21 0.884 0.002
22 0.882 0.002
23 0.878 0.002
24 0.874 0.001

Rank Country HDI
New 2011 Estimates for 2011
[11]
Change compared to new 2011 data for 2010[11] New 2011 Estimates for 2011
[11]
Change compared to new 2011 data for 2010
[11]
25 0.867 0.002
26 0.866 0.002
27 0.865 0.002
28 0.863 0.001
29 0.861 0.001
30 0.846 0.001
31 0.840 0.001
32 0.838
33 0.838 0.001
34 0.835 0.003
35 0.834 0.002
36 0.832 0.002
37 0.831 0.006
38 0.816 0.002
39 0.813 0.002
40 (1) 0.810 0.005
41 (-1) 0.809 0.001
42 0.806 0.001
43 0.805 0.003
44 0.805 0.003
45 (1) 0.797 0.003
46 (-1) 0.796 0.002
47 0.793 0.005

Average disposable wage of OECD members

While GDP per capita is often used to measure how developed a country is, it includes components that do not directly contribute to a citizen's well-being. However, breaking down GDP to its components and measuring only wages and salaries gives a more accurate picture of the living standard of a country. Unlike the gross wage, which can be an inaccurate indicator of the well-being of a citizen since it does not represent the full amount of money the worker will be left to consume on goods or services, the disposable wage excludes compulsory deductions such as income tax, municipal tax, provincial/state income tax, social security (pension plan, medicare) and compulsory insurance, thus measuring only the direct earnings of the citizen. The list below has compulsory deductions applied with rates obtained from the 2010 OECD Tax Database, which includes figures for all personal compulsory payments assuming that the citizen is single with no children, with an income level 100% of the average wage.[12] The gross employment income are shown for reference and all monetary values are based on the OECD's purchasing power parity exchange rates. Note that the OECD does not publish data for some countries and hence they are not listed.

Rank Country Disposable $
2010[13]
Disposable $
growth[14]
Compulsory
deduction[15]
Gross $
2010[16]
1 40,560 271 22.9% 52,607
2 38,301 -45 26.5% 52,110
3 38,128 422 21.8% 48,757
4 35,265 -245 29.2% 49,810
5 33,360 544 21.6% 42,550
6 32,786 -664 25.5% 44,008
7 32,047 336 22.2% 41,191
8 31,489 558 28.7% 44,164
9 29,268 1,311 11.9% 33,221
10 28,773 -101 37.0% 45,671
11 28,269 68 32.7% 42,005
12 27,656 45 24.9% 36,826
13 27,526 229 27.8% 38,124
14 26,849 540 20.8% 33,900
15 26,562 176 38.5% 43,190
16 26,386 -198 21.6% 33,656
17 25,316 275 29.1% 35,707
18 24,910 -312 42.1% 43,023
19 23,302 45 39.2% 38,325
20 22,925 176 29.8% 32,657
21 22,317 -1,622 18.8% 27,484
22 17,866 -50 22.9% 23,173
23 15,955 126 22.5% 20,587
24 14,694 540 21.5% 18,719
25 13,197 109 28.2% 18,380
26 12,843 -340 31.2% 18,667

Other lists of developed countries

Only three institutions have produced lists of "developed countries". The three institutions and their lists are the UN list (shown above), the CIA[17] list and the FTSE Group's list, whose list is not included because its association of developed countries with countries with both high incomes and developed markets is not deemed as directly relevant here.[18] However many institutions have created lists which are sometimes referred to when people are discussing developed countries. The International Monetary Fund (IMF) identifies 35 "advanced economies",[19][20] The OECD, also widely known as the "developed countries club"[21][22][23] has 34 members. The World Bank identifies 66 "high income countries". The EIU's Quality-of-life survey and a list of countries with welfare states are also included here. The criteria for using all these lists and for countries' inclusion on these lists are often not properly spelt out, and several of these lists are based on old data.

World Bank high-income economies

According to the World Bank there are 66 "high-income economies"[24].

IMF advanced economies

<!-- legend -->

According to the IMF the following 35 economies are classified as "advanced economies":[19]

The CIA has modified an older version of the IMF's list of Advanced Economies, noting that the IMF's Advanced Economies list "would presumably also cover"[17] some smaller countries. These include:

Development Assistance Committee members

Member nations of the Development Assistance Committee.
Member nations of the Development Assistance Committee.
There are 24 members 23 selected OECD member countries and the European Commission in the Development Assistance Committee,[25] a group of the world's major donor countries that discuss issues surrounding development aid and poverty reduction in developing countries.[26] The following OECD member countries are DAC members:

17 countries in Europe:

  • (since 1965)
  • (since 1961)
  • (since 1963)
  • (since 1975)
  • (since 1961)
  • (since 1961)
  • (since 1999)
  • (since 1985)
  • (since 1961)
  • (since 1992)
  • (since 1961)
  • (since 1962)
  • (since 1961)1
  • (since 1991)
  • (since 1965)
  • (since 1968)
  • (since 1961)

2 countries in Asia:

  • (since 1961)
  • (since 2010)

2 countries in North America:

  • (since 1961)
  • (since 1961)

2 countries in Oceania:

  • (since 1966)
  • (since 1973)

1 Joined the DAC in 1961, withdrew in 1974 and re-joined in 1991.

High-income OECD members

There are 31 high-income OECD members.[27] As of 2010, the High-income OECD membership is as follows:

24 countries in Europe:

3 countries in Asia:

2 countries in North America:

2 countries in Oceania:

Economist's quality-of-life survey of 2005

Research about standard of living and quality of life by the Economist Intelligence Unit resulted in a quality-of-life index, covering 111 countries. As of 2005, the top 30 countries are:[28]

  1. Ireland

  2. Switzerland

  3. Norway

  4. Luxembourg

  5. Sweden

  6. Australia

  7. Iceland

  8. Italy

  9. Denmark

  10. Spain

    1. Singapore

    2. Finland

    3. United States

    4. Canada

    5. New Zealand

    6. Netherlands

    7. Japan

    8. Hong Kong

    9. Portugal

    10. Austria

      1. Taiwan

      2. Greece

      3. Cyprus

      4. Belgium

      5. France

      6. Germany

      7. Slovenia

      8. Malta

      9. United Kingdom

      10. South Korea

Newsweek's Quality of Life Index of 2010

Newsweek published in 2010 the "world's best countries" index, measuring "health, education, economy, and politics" in 100 countries. As of 2010, the top 30 countries in terms of quality of life are:[29]

See also

  • Developing country
  • Least developed country
  • North South divide

References

  1. http://www.investopedia.com/terms/d/developed-economy.asp#axzz1legO8olO
  2. IMF GDP data (September 2011)
  3. http://www.unescap.org/unis/press/G_05_00.htm
  4. http://unstats.un.org/unsd/methods/m49/m49.htm
  5. http://unstats.un.org/unsd/methods/m49/m49regin.htm#developed archived http://www.webcitation.org/652OsrnRM 28 Jan 2012
  6. The official classification of "advanced economies" is originally made by the International Monetary Fund (IMF). The IMF list doesn't deal with non-IMF members. The Central Intelligence Agency (CIA) intends to follow IMF list but adds few economies which aren't dealt with by IMF due to their not being IMF members. By May 2001, the advanced country list of the CIA was more comprehensive than the original IMF list. However, since May 2001, three additional countries (Cyprus, Malta and Slovenia) have been added to the original IMF list, thus leaving the CIA list not updated.
  7. Namely sovereign states, i.e., excluding Macau: In 2003 the government of Macau calculated its HDI as being 0.909 (the UN does not calculate Macau's HDI); In January 2007, the People's Daily reported (from China Modernization Report 2007): "In 2004... Macau... had reached the level of developed countries". However, Macau is not recognized by any international organisation as a developed/advanced territory, while the UNCTAD organisation (of the UN), as well as the CIA, classify Macau as a "developing" territory. The World Bank classifies Macau as a high income economy (along with developed economies as well as with few developing economies).
  8. a b c d e f g h i http://hdr.undp.org/en/media/HDR_2011_EN_Table1.pdf
  9. OECD Tax Database - Table S.2 - Average net personal compulsory payment rate (single, no children, 100% AW)
  10. Gross wage - Compulsory deduction.
  11. Disposable income in 2010 - Disposable income in 2009.
  12. OECD Tax Database - Table S.2 - Average net personal compulsory payment rate (single, no children, 100% AW)
  13. OECD Statistics -> Data by theme -> Labour -> Earnings -> Average annual wages
  14. a b
  15. http://www.ftse.com/Indices/Country_Classification/Downloads/FTSE_Country_Classification_Sept_09_update.pdf The Developed Countries Glossary entry reads: "The following countries are classified by FTSE as developed countries: Australia, Austria, Belgium/Luxembourg, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, South Korea, Singapore, Spain, Sweden, Switzerland, United Kingdom and the United States."
  16. a b
  17. a b
  18. http://www.hungarianquarterly.com/no160/104.shtml
  19. http://www.indianexpress.com/old/ie/daily/19971214/34850733.html
  20. http://www.esri.go.jp/en/forum1/minute/minute26-e.html
  21. http://data.worldbank.org/about/country-classifications/country-and-lending-groups#High_income
  22. http://www.oecd.org/document/38/0,3343,en_2649_34603_1893350_1_1_1_1,00.html
  23. DAC website >> "The DAC in Dates", On the DAC's self-description, see the introductory letter. On other events, refer to the relevant section by date.
  24. http://data.worldbank.org/about/country-classifications/country-and-lending-groups#OECD_members
  25. The world in 2005: The Economist Intelligence Unit's quality-of-life index, The Economist. Accessed on line January 8, 2007.
  26. The world's best countries: 2010 index, Newsweek. Accessed on line August, 15 2010.

External links

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