Developed Economy

Developed economies tend to be developed states with high levels of economic growth and security. To assess a country's level of development, one considers the general standard of living, per capita income, the amount of technological infrastructure, and the level of industrialization.

Non-economic factors can also give a valuation of a country's economy and degree of development. For example, a quantitative representation of the level of education, literacy, and health in a country. These are reflected in the human development index (HDI).

Understanding a Developed Economy

One of the main and most used indicators to evaluate the level of a country's economy (developed or developing) is the gross domestic product (GDP) per capita. There is no strictly defined level of developing or developed economy. Some economists believe that $12,000 to $15,000 GDP per capita is enough for developed country status, and others believe that a country is developed if its GDP per capita does not exceed $25,000 or $30,000. In 2019, GDP per capita in the United States was $65,111.

If economists find it difficult to determine whether a country is developed or developing, they look at other factors. Infant mortality and life expectancy are also indicators of the standard of living and for which there are also no set limits. The average age of death in most developed states is 75 years or older, but also there are 10 infant deaths per 1,000 live births.

The country gets the status of a developed economy based on a complex of different factors. GDP per capita by itself is not enough to make an assessment. The United Nations still recognizes Qatar's GDP per capita as one of the highest in the world. In 2021, it was about $62,000. But the country is still classified as a developing economy due to the country's extreme income inequality, limited opportunities for getting education by non-affluent citizens, and lack of infrastructure.

Developed economies cover Canada, the United States, Great Britain, France and other Western European countries.

The human development indexes

The United Nations (UN) assesses a country's standard of living by the Human Development Index (HDI). It covers literacy, availability of education, and availability of health care, and presents these data with a standardized number in the range of 0 to 1. Most developed states have HDI exceeding 0.8.

According to the UN report on the HDI, in 2020 Norway had the highest index (0.957), the United States got the 17th line (0.926), and Niger had the lowest index (0.394). A total of 189 countries were rated. Norway, Ireland, Switzerland, Hong Kong, Iceland, Germany, Sweden, Australia, the Netherlands and Denmark were among the top 10 countries by HDI.

Developing Economies

Nowadays, it is considered archaic and offensive to use the phrase "third world country" for describing a state that does not have the same indicators of economic growth, security and industrialization as developed states. The expressions "emerging states," "least-developed states" and "developing states" are used instead.

At the UN conference, it was announced that the majority of the least developed states cannot escape poverty and are considered to be severely underdeveloped for geographical reasons.

According to proponents, globalization helps developing economies to fight poverty and find ways to improve living standards, increase salaries, and use modern technologies. Globalization has shown that it improves economies in Asia-Pacific region countries. Although it has not worked in most developing countries and has disadvantages that should be taken into account when foreign investing in developing economies.