What do developed countries have in common

Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. A developed economy is typically characteristic of a developed country with a relatively high level of economic growth and security.

Standard criteria for evaluating a country's level of development are income per capita or per capita gross domestic product, the level of industrialization, the general standard of living , and the amount of technological infrastructure.

Noneconomic factors, such as the human development index HDI , which quantifies a country's levels of education, literacy, and health into a single figure, can also be used to evaluate an economy or the degree of development.

The most common metric used to determine if an economy is developed or developing is per capita gross domestic product GDP , although no strict level exists for an economy to be considered either developing or developed.

The U. For countries that are difficult to categorize, economists turn to other factors to determine development status.

Standard-of-living measures, such as the infant mortality rate and life expectancy , are useful although there are no set boundaries for these measures either. However, most developed economies suffer fewer than 10 infant deaths per 1, live births, and their citizens live to be 75 or older on average. A high per capita GDP alone does not confer developed economy status without other factors. Examples of countries with developed economies include the United States, Canada, and most of western Europe, including the United Kingdom and France.

The HDI looks at three standards of living criteria—literacy rates, access to education, and access to health care—and quantifies this data into a standardized figure between 0 and 1. Most developed countries have HDI figures above 0. The United States ranked 15th at 0. Niger had the lowest human development index score at 0. Terms such as "emerging countries," "least-developed countries," and "developing countries" are commonly used to refer to countries that do not enjoy the same level of economic security, industrialization , and growth as developed countries.

The term "third-world country" to describe a state is today considered archaic and offensive. The United Nations Conference on Trade and Development notes that the world's least-developed countries are "deemed highly disadvantaged in their development process—many of them for geographical reasons—and face more than other countries the risk of failing to come out of poverty.

In the most recent year comprehensive data on global poverty are available , million people, or For nations specifically, which measure wealth in terms of GDP, escaping poverty requires increasing the amount of output per person that their economy produces.

In short, economic growth enables countries to escape poverty. Economic growth is a sustained rise over time in a nation's production of goods and services. How can a country increase its production? Well, an economy's production is a function of its inputs, or factors of production natural resources, labor resources, and capital resourc es , and the productivity of those factors specifically the productivity of labor and capital resources , which is called total factor productivity TFP.

Consider a shoe factory. Total shoe production is a function of the inputs raw materials such as leather, labor supplied by workers, and capital resources, which are the tools and equipment in the factory , but it also depends on how skilled the workers are and how useful the equipment is. Now, imagine two factories with the same number of workers. In the first factory, workers with basic skills move goods around with push carts, assemble goods with hand tools, and work at benches.

In the second factory, highly trained workers use motorized forklifts to move pallets of goods and power tools to assemble goods that move along a conveyer belt. Because the second factory has higher TFP, it will have higher output, earn greater income, and provide higher wages for its workers.

Similarly, for a country, higher TFP will result in a higher rate of economic growth. A higher rate of economic growth means more goods are produced per person, which creates higher incomes and enables more people to escape poverty at a faster rate. But, how can nations increase TFP to escape poverty?

While there are many factors to consider, two stand out. First, institutions matter. For an economist, institutions are the "rules of the game" that create the incentives for people and businesses.

For example, when people are able to earn a profit from their work or business, they have an incentive not only to produce but also to continually improve their method of production. The "rules of the game" help determine the economic incentive to produce.

On the flip side, if people are not monetarily rewarded for their work or business, or if the benefits of their production are likely to be taken away or lost, the incentive to produce will diminish.

For this reason, many economists suggest that institutions such as property rights, free and open markets, and the rule of law see the boxed insert provide the best incentives and opportunities for individuals to produce goods and services. North and South Korea often serve as an example of the importance of institutions. In a sense they are a natural experiment. These two nations share a common history, culture, and ethnicity.

In these nations were formally divided and governed by very different governments. North Korea is a dictatorial communist nation where property rights and free and open markets are largely absent and the rule of law is repressed. In South Korea, institutions provide strong incentives for innovation and productivity. The results? North Korea is among the poorest nations in the world, while South Korea is among the richest. Additional choices include political freedom, guaranteed human rights and personal self-respect.

Development enables people to have these choices. No one can guarantee human happiness, and the choices people make are their own concern. But the process of development should at least create a conducive environment for people, individually and collectively, to develop their full potential and to have a reasonable chance of leading productive and creative lives in accord with their needs and interests.

Development, then, encompasses two concepts: the economic pursuit of a pattern of growth that ensures the productive use of a developing country's most abundant resource, its labour; and the widespread provision of basic social services, thereby meeting the human needs of the population.

Any aid strategy formulated by developed countries must address this central dilemma. In the s, industrial countries and international agencies such as the World Bank and the International Monetary Fund stressed the need for continued economic growth in order to promote development in Third World countries.

The prevailing sentiment was that such growth could be achieved only through "structural adjustment programs" SAPs. IMF and World Bank loans were disbursed only to those developing countries that implemented tough domestic policies whose main thrust was to reduce government expenditure and make the over-all economy more competitive.

These long-term, market-oriented reforms were based on a simple premise: better government was less government. By the late s, studies revealed that adjustment measures were not working; many countries receiving IMF or World Bank assistance had made little or no progress in improving their economic performance.

What is more, many of the reforms - such as reducing the size of government, raising interest rates, lowering budget deficits by cutting subsidies, abolishing price controls and curbing wage increases - were resulting in wide-spread unemployment and causing particular hardship among poor people and vulnerable groups dependent on food subsidies and agricultural, educational and welfare services.

Women were especially hard hit. In other words, the people most in need of assistance were being left to fend for themselves, with inevitable results. Structural adjustment programs continue to be implemented, however.

Over the last two years, Canada, for example, has become more directly involved in their initial formulation, and there has been an increased linking of Canada's bilateral aid to SAPs. This policy shift has come under considerable attack from Canada's NGO, church and academic communities, as the social costs of structural adjustment continue to inflict serious damage on the poorer segments of the Third World's population.

The focus on structural adjustment and the need for economic stabilization and growth in the s and early s have left human development in the shadows.

While few would deny that SAPs are necessary so that developing countries can build market-oriented economies and learn to balance their budgets, it is becoming increasingly clear that adjustment will not ensure sustainable economic growth if a country's population is illiterate or in poor health. Most experts now agree that in order to make structural adjustment work while at the same time reducing the severity of some of its side-effects , more effort must be made to target the poorest through support for the social sector, specifically primary health care and basic education.

Within these areas, women, who comprise the majority of the world's poor, must be given special priority. Producing a healthy population is not only an end in itself, but also releases resources that can be used to achieve other development goals. By raising workers' productivity, for example, it yields sustainable economic benefits. Primary health care is for many countries the cheapest and quickest way to improve health standards.

However, most developing countries spend a large proportion of their health budgets on hospitals, while very high infant mortality rates continue. Moreover, when a country is undergoing a severe economic adjustment program, primary health care is often the first social service to be cut.

Along the same lines, education in not only a noble aim in itself and a true measure of quality of life but promotes economic growth and puts other development goals within reach. Primary education, in particular, yields high economic returns, often twice those of higher education. Moreover, it is an excellent means of channelling resources towards the poor, since a far greater share of the benefits of primary education accrue to those less well off.

Unfortunately, primary education accounts for less than half the total expenditure on education in developing countries. It has been estimated that over million children worldwide receive no primary education, while a further million receive no education beyond the age of International aid constitutes a high proportion of many Third World countries' development budgets, and for this reason, it should be carefully directed.

Clearly, the industrial states can offer tremendous help to the poor in developing countries by directing their aid towards the social sectors, in particular primary health care and education. Unfortunately, the record up to now has not been impressive. According to the North-South Institute, Canada's record in this area follows the international trend.

Most donor countries prefer to pour money into capital intensive schemes that happen to require machinery and technical assistance from the same donor countries. Unemployment of trained personnel and a national civil service demoralised by low salary levels often exist side by side with large numbers of foreign, high-priced experts and consultants. The Human Development Report argues that the time has come to change this trend. This would not only reduce the cost of assistance, it would also release millions of dollars that could be put to more productive purposes.

Donors could also enhance human development in the Third World by offering new conditions for cooperation - for example, by specifying that human development programs should be the last, not the first, to be reduced in an adjustment period or by making it clear that external assistance would be reduced if a country's military expenditure exceeded its social expenditure.

Finally, aid channelled into the social sector might also serve as an incentive to reluctant finance ministers to devote a larger share of domestic resources to social spending, as Third World governments often need to be encouraged to set up food and health subsidies that transfer income and other economic opportunities to the very poor. The erection of such safety nets would cost only a small fraction of GNP and would prevent more costly political and social disturbances later.

No aid strategy aimed at human development in the Third World can neglect the environment, for there is ultimately a fundamental link between a healthy environment and a healthy society and economy. It is no coincidence that the vast majority of the world's poor live in the most ecologically vulnerable areas of Latin America, Asia and Africa.

In these societies, there is no choice between rapid economic growth and environmental protection. Indeed, growth is not an option but an absolute necessity.

Many choices that degrade the environment are made not because of lack of concern for the future, but because of the imperative for immediate survival. As the Human Development Report explains, "it is not the quality of life that is at risk - it is life itself. The countries of the North and South define environmentally sustainable development in different ways.