Developing countries are those that have a low gross domestic product (GDP) per person. They tend to rely on agriculture as their prime industry. They have not quite reached economic maturity, although there are a number of definitions for this term.
Learn more about what a developing country is, how they work, and why they matter.
Definition and Examples of Developing Countries
A developing country is often defined by its economic output. There has been a lot of debate as to where to draw the line between a developed country and a developing one, which can be seen by the lack of one single meaning for the term.
The United Nations has some rules for distinguishing between developed and developing countries. The World Bank has stopped using these terms in favor of others, such as "low-income" or "lower-middle-income" economies, based on gross national income (GNI) per person.
- Alternate name: Low-income economy
- Alternate definition: Countries with a per-person income of less than $1,045 in 2020 as being low income. The International Monetary Fund's (IMF) definition is based on per-person income, export diversification, and the degree of union with the global financial system.
The IMF published a research report on the topic of development classification in 2011. It outlined its methods for classifying a country's level of development.
Countries that are deemed more developed are referred to as developed countries, while those that are less developed are known as less economically developed countries (LEDCs), or frontier markets.
Investors often sort countries around the world based on their level of economic development. Several levels exist, and investors use many economic and social criteria to calculate those levels. These range from per capita income and life expectancy to literacy rates. Developing countries, less developed countries (LDCs), and emerging markets have lower ratings.
While lists of which countries qualify as "developing" may change depending on who is creating them, the following is a list of some of the countries included on the United Nations' list of least developed countries:
- Solomon Islands
How Developing Countries Work
Classifying countries became common in the 1960s as a way to better understand the outcomes of countries in each group. Sorting countries into these groups allows for easier policy discussions on moving resources to the countries with people who are poor.
Although organizations use different measures to determine how countries are classified, a few common factors appear in the mix. Brazil, Russia, India, China, and South Africa (BRICS) are often thought to be developing countries.
Others include 10 newly industrialized countries, which are the BRICS countries, but not including Russia. This list adds Indonesia, Malaysia, Mexico, Philippines, Thailand, and Turkey.
Exactly why some countries are considered developing isn't just a matter of their current economic state, but one that extends back to their pre- and post-colonial history. For example, many countries in Africa are considered "developing." Some historians have argued that colonization hampered the development of those nations and led to the economic issues they face today.
The use of terms like "developing" and "developed" and predecessors "first-world," "second-world," and "third-world" are controversial. The terms assume a heirarchy among countries, and may give the impression that developing nations are bad and developed nations are good. Furthermore, the history of some "developed" countries reveals that their economic strength was built on the colonization of countries now deemed "developing."
Developing Country vs. Emerging Market
|Developing Country||Emerging Market|
|Less industrialized||Becomes more engaged with global markets|
|Often agricultural||Transitioning to modern industrialized economy|
|Lower per capita income||Higher standard of living|
The primary difference between these countries is the increased presence of industrialization. Unlike countries that rely on agriculture as their prime industry, emerging markets are making strides in technology, infrastructure, and manufacturing. This has led to increased income and growth.
- Developing countries are countries with economies that have a low GDP per person and rely on agriculture as the main industry.
- There is no single definition of a developing country.
- The terms "developed" and "developing" are controversial. The terms may give the impression that some countries and good and some are bad simply based on economic factors.
- Emerging countries are those making strong strides in technology and other manufacturing sectors.