Developed country

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A developed country, industrialized country, or "more developed economically country" (MEDC), is a sovereign state that has a highly developed economy and advanced technological infrastructure relative to other less industrialized nations. Most commonly, the criteria for evaluating the degree of economic development are gross domestic product (GDP), the per capita income, level of industrialization, amount of widespread infrastructure and general standard of living.1 Which criteria are to be used and which countries can be classified as being developed are subjects of debate.

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 2012, the ten largest advanced economies by either nominal GDP or GDP (PPP) are the United States, Japan, Germany, France, the United Kingdom, Italy, Canada, Australia, Spain and South Korea.3

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 geographerscitation needed 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.examples needed

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 and South Korea in Asia, Canada and the United States in Northern America, Australia and New Zealand in Oceania, and western 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 Central Europe and of the Commonwealth of Independent States (Russian Federation, Ukraine, Belarus, and Central Asia; code 172) in Europe are not included under either developed or developing regions."

Human Development Index (HDI)

World map by quartiles of Human Development Index in 2013.
  Very High
  High
  Medium
  Low
  Data unavailable

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, 2009–2013), 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 0.955 in Norway.

Many countries listed by IMF or8 CIA as "advanced" (as of 2009), possess an HDI over 0.788 (as of 2010). Many countries9 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 14 March 2013 and covers the period up to 2012. The following are the 47 countries in the top quartile - having an HDI above 0.8, and classified as possessing a "Very high human development".

Note: The green arrows (Increase), red arrows (Decrease), and blue dashes (Steady) represent changes in rank when compared to the 2011 data – published in the 2011 report.

  1.  Norway 0.955 (Steady)
  2.  Australia 0.938 (Steady)
  3.  United States 0.937 (Increase 1)
  4.  Netherlands 0.921 (Decrease 1)
  5.  Germany 0.920 (Increase 4)
  6.  New Zealand 0.919 (Increase 1)
  7.  Ireland 0.916 (Steady)
  8.  Sweden 0.916 (Increase 3)
  9.   Switzerland 0.913 (Increase 2)
  10.  Japan 0.912 (Increase 2)
  11.  Canada 0.911 (Decrease 5)
  12.  South Korea 0.909 (Increase 3)
  13.  Hong Kong 0.906 (Steady)
  14.  Iceland 0.906 (Steady)
  15.  Denmark 0.901 (Increase 1)
  16.  Israel 0.900 (Increase 1)
  17.  Belgium 0.897 (Increase 1)
  18.  Austria 0.895 (Increase 1)
  19.  Singapore 0.895 (Increase 7)
  20.  France 0.893 (Steady)
  21.  Finland 0.892 (Increase 1)
  22.  Slovenia 0.892 (Steady)
  23.  Spain 0.885 (Steady)
  24.  Liechtenstein 0.883 (Decrease 16)
  25.  Italy 0.881 (Decrease 1)
  26.  Luxembourg 0.875 (Decrease 1)
  27.  United Kingdom 0.875 (Increase 1)
  28.  Czech Republic 0.873 (Decrease 1)
  29.  Greece 0.860 (Steady)
  30.  Brunei 0.855 (Increase 1)
  31.  Cyprus 0.848 (Decrease 1)
  32.  Malta 0.847 (Increase 4)
  33.  Andorra 0.846 (Decrease 1)
  34.  Estonia 0.846 (Steady)
  35.  Slovakia 0.840 (Steady)
  36.  Qatar 0.834 (Increase 1)
  37.  Hungary 0.831 (Increase 1)
  38.  Barbados 0.825 (Increase 9)
  39.  Poland 0.821 (Steady)
  40.  Chile 0.819 (Increase 4)
  41.  Lithuania 0.818 (Decrease 1)
  42.  United Arab Emirates 0.818 (Decrease 12)
  43.  Portugal 0.816 (Decrease 2)
  44.  Latvia 0.814 (Decrease 1)
  45.  Argentina 0.811 (Steady)
  46.  Seychelles 0.806 (Increase 6)
  47.  Croatia 0.805 (Decrease 1)

As a non-UN member, the government of Taiwan calculates its own HDI, which had a value of 0.882 in 2011.10 Additionally, while the HDI for the Chinese special administrative region of Hong Kong is calculated by the UN, it is not for Macau. The Macanese government calculated the territory's HDI to be 0.868 in 2011. These values place both Taiwan and Macau well within the list of countries with "Very high human development".11 Furthermore, in 2009 a United Nations project calculated the HDI for all of its members, as well as Taiwan, Macau, and many dependent territories. The HDI values for the countries of San Marino and Monaco, which have not been included in official annual HDI reports, were found to be at 0.961 and 0.956 respectively. This places both countries firmly within the category of countries with "Very high human development" as well. The dependent territories with HDI values equivalent to "Very high human development" were: Jersey, Cayman Islands, Bermuda, Guernsey, Gibraltar, Norfolk Island, Faroe Islands, Isle of Man, British Virgin Islands, Falkland Islands, Aruba, Puerto Rico, Martinique, and Guam.12 Of note, the HDI values in the 2009 report were calculated using the old HDI formula, while HDI values after the year 2010 are calculated with a different formula.

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 contribute to a citizen's standard of living. GDP per capita may increase while real incomes for the majority decline. However, measuring only wages and salaries gives a more accurate picture of a country's standard of living. Unlike the gross wage, which can be a misleading 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. The list below has compulsory deductions applied with rates obtained from the OECD Tax Database, which assumes that the citizen is single with no children, with an income level 100% of the average wage.13 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 income
in 2012 USD14
Compulsory
deduction13
Gross income
in 2012 USD15
1  United States 38,753 29.6% 55,047
2  Ireland 38,210 25.9% 51,565
3  Luxembourg 33,373 36.6% 52,639
4  Australia 33,319 32.9% 49,655
5   Switzerland 32,066 39.8% 53,265
6  Canada 31,501 30.8% 45,521
7  United Kingdom 29,938 32.3% 44,222
8  South Korea 29,038 21.0% 36,757
9  Norway 28,543 38.5% 46,412
10  Denmark 27,424 39.1% 45,031
11  Japan 23,486 31.2% 34,137
12  Austria 22,813 48.9% 44,644
13  Finland 22,548 42.5% 39,214
14  Sweden 22,512 43.0% 39,494
15  Netherlands 22,064 52.7% 46,646
16  Germany 21,187 49.7% 42,121
17  Belgium 20,894 56.0% 47,487
18  Israel 20,795 27.6% 28,722
19  Spain 20,232 41.4% 34,525
20  France 19,721 50.2% 39,600
21  Slovenia 18,575 42.3% 32,193
22  Italy 16,789 50.4% 33,849
23  Greece 15,142 41.9% 26,062
24  Portugal 14,621 36.7% 23,098
25  Poland 12,582 40.4% 21,110
26  Czech Republic 11,637 43.2% 20,487
27  Slovakia 11,479 43.2% 20,210
28  Estonia 10,642 41.6% 18,222
29  Hungary 10,288 49.4% 20,332

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 CIA16 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.17 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",1819 The OECD, also widely known as the "developed countries club"202122 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.

IMF advanced economies

  Countries described as Advanced Economies by the IMF.

According to the IMF the following 36 economies are classified as "advanced economies":18

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"16 some smaller countries. These include:

World Bank high-income economies

Economies Developed according to the World Bank

According to the World Bank, there are 76 "high-income economies".23

The list includes most of Europe, Russia, Japan, South Korea, Australia, New Zealand, the USA, Canada, Uruguay, Chile, United Arab Emirates and Saudi Arabia.

High-income OECD members

There are 30 members in the High-income OECD category, as determined by the World Bank.24 The High-income OECD membership is as follows:

23 countries in Europe:

3 countries in Asia:

3 countries in the Americas:

2 countries in Oceania:

Development Assistance Committee members

Member nations of the Development Assistance Committee

There are 29 members — 28 selected OECD member countries and the European Union—in the Development Assistance Committee (DAC),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:

22 countries in Europe:

2 countries in Asia:

2 countries in North America:

2 countries in Oceania:

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

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:27

Newsweek's the world's best countries Index of 2010

Newsweek published in 2010 the "world's best countries" index, measuring "education, health, quality of life, economic dynamism, and political environment" in 100 countries. As of 2010, the top 30 countries are:28

The top 30 countries in terms of quality of life are:

See also

References

  1. ^ Developed Economy Definition. Investopedia (2010-04-16). Retrieved on 2013-07-12.
  2. ^ IMF GDP data (September 2011)
  3. ^ "Gross domestic product, current prices & Gross domestic product based on purchasing-power-parity (PPP) valuation of country GDP". World Economic Outlook Database, April 2012. International Monetary Fund. April 2012. Retrieved 2014-02-23. 
  4. ^ Sachs, Jeffrey (2005). The End of Poverty. New York, New York: The Penguin Press. ISBN 1-59420-045-9. 
  5. ^ Media Centre. Un Escap. Retrieved on 2013-07-12.
  6. ^ "Composition of macro geographical (continental) regions, geographical sub-regions, and selected economic and other groupings (footnote C)". United Nations Statistics Division. 17 October 2008. Retrieved 2008-12-30. 
  7. ^ United Nations Statistics Division- Standard Country and Area Codes Classifications (M49). Unstats.un.org. Retrieved on 2013-07-12.
  8. ^ 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.
  9. ^ 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).
  10. ^ "2011中華民國人類發展指數 (HDI)" (PDF) (in Chinese). Directorate General of Budget, Accounting and Statistics, Executive Yuan, R.O.C. 2011. Retrieved 2011-11-21. 
  11. ^ Macau in Figures, 2013
  12. ^ Filling Gaps in the Human Development Index, United Nations ESCAP, February 2009
  13. ^ a b OECD Tax Database - Figure V.1 compares average tax wedges and compulsory payment wedges (updated March 2013) for single taxpayers at average earnings without children in 2012
  14. ^ Gross income - Compulsory deductions = Disposable income
  15. ^ OECD Statistics -> Data by theme -> Labour -> Earnings -> Average annual wages
  16. ^ a b CIA (2008). "Appendix B. International Organizations and Groups.". World Factbook. Retrieved 2008-04-10. 
  17. ^ http://www.ftse.com/Indices/Country_Classification/Downloads/September_2013_Country_Classification_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 (People's Republic of China), Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Republic of China (Taiwan), South Korea, Singapore, Spain, Sweden, Switzerland, United Kingdom and the United States."
  18. ^ a b IMF Advanced Economies List. World Economic Outlook, April 2014, p. 160
  19. ^ World Economic Outlook, International Monetary Fund, September 2011, p. 165.
  20. ^ http://www.hungarianquarterly.com/no160/104.shtml
  21. ^ http://www.indianexpress.com/old/ie/daily/19971214/34850733.html
  22. ^ Minutes of Forum #26:Global Strategy Series 2 - Japan as It Should Be (Outline) | Economic and Social Research Institute, Cabinet Office, Government of Japan. Esri.go.jp. Retrieved on 2013-07-12.
  23. ^ Country and Lending Groups | Data. Data.worldbank.org. Retrieved on 2013-07-12.
  24. ^ Country and Lending Groups | Data. Data.worldbank.org. Retrieved on 2013-07-12.
  25. ^ Peer reviews of DAC members - Organisation for Economic Co-operation and Development. Oecd.org. Retrieved on 2013-10-22.
  26. ^ 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.
  27. ^ The world in 2005: The Economist Intelligence Unit's quality-of-life index, The Economist. Accessed on line January 8, 2007.
  28. ^ The world's best countries: 2010 index, Newsweek. Accessed on line August 15, 2010.


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