A developing country is a country with a less-developed industrial base and a lower Human Development Index (HDI) relative to developed countries. However, this definition is not universally agreed upon. There is also no clear agreement on which countries fit this category. The terms low-and middle-income country (LMIC) and newly emerging economy (NEE) are often used interchangeably but they refer only to the economy of the countries. The World Bank classifies the world's economies into four groups, based on gross national income per capita: high-, upper-middle-, lower-middle-, and low-income countries. Least developed countries, landlocked developing countries, and small island developing states are all sub-groupings of developing countries. Countries on the other end of the spectrum are usually referred to as high-income countries or developed countries.
There are controversies over the terms' use, as some feel that it perpetuates an outdated concept of "us" and "them". In 2015, the World Bank declared that the "developing/developed world categorization" had become less relevant and that they would phase out the use of that descriptor. Instead, their reports will present data aggregations for regions and income groups. The term "Global South" is used by some as an alternative term to developing countries.
Developing countries tend to have some characteristics in common, often due to their histories or geographies. These are the characteristics captured by the data and definitions of the World Bank and the United Nations. On the other hand, the IMF classification focuses solely on financial integration and stability and not on the overall level of social and economic development of a country. It is also reflected by the IMF terminology that uses markets/economies and not countries. Moreover, the adoption of the Euro has earned several European countries an immediate upgrade by IMF to being a developed economy (a standard practice by the IMF) based on the larger financial integration without considering any other factors of economic or social development.
Among other characteristics, developing or low and medium income countries (as defined by the World Bank) commonly have lower levels of access to safe drinking water, sanitation and hygiene, energy poverty, higher levels of pollution (e.g., air pollution, littering, water pollution, open defecation); higher proportions of people with tropical and infectious diseases (neglected tropical diseases); more road traffic accidents; and generally poorer quality infrastructure.
In addition, there are often high unemployment rates, widespread poverty, widespread hunger, extreme poverty, child labour, malnutrition, homelessness, substance abuse, prostitution, overpopulation, civil disorder, human capital flight, a large informal economy, high crime rates (extortion, robbery, burglary, murder, homicide, arms trafficking, sex trafficking, drug trafficking, kidnapping, rape), high incarceration rates, low education levels, economic inequality, school desertion, inadequate access to family planning services, teenage pregnancy, many informal settlements and slums, corruption at all government levels, and political instability. Unlike developed countries, developing countries lack the rule of law.
Access to healthcare is often low. People in developing countries usually have lower life expectancies than people in developed countries, reflecting both lower income levels and poorer public health. The burden of infectious diseases, maternal mortality, child mortality and infant mortality are typically substantially higher in those countries. The effects of climate change are expected to affect developing countries more than high-income countries, as most of them have a high climate vulnerability or low climate resilience. Phrases such as "resource poor setting" or "low-resource setting" are often used when referring to healthcare in developing countries.
Developing countries often have lower median ages than developed countries. Population aging is a global phenomenon, but population age has risen more slowly in developing countries.
Development aid or development cooperation is financial aid given by foreign governments and other agencies to support developing countries' economic, environmental, social, and political development. If the Sustainable Development Goals which were set up by United Nations for the year 2030 are achieved, they would overcome many problems.
Terms used to classify countries
There are several terms used to classify countries into rough levels of development. Classification of any given country differs across sources, and sometimes, these classifications or the specific terminology used is considered disparaging.
By income groups
The World Bank classifies the world's economies into four groups, based on gross national income per capita calculated using the Atlas method, re-set each year on 1 July: high income countries (similar to developed countries) upper-middle income countries lower-middle income countries low-income countries
The three groups that are not "high income" are together referred to as "low and middle income countries" (LMICs). For example, for the 2027 fiscal year, a low income country is defined as one with a GNI per capita less than 1,135 in current US$; a lower middle-income country is one with GNI per capita between 1,135 and 4,495 in current US$; an upper middle-income country is one with GNI per capita between 4,495 and 14,375 in current US$, and a high income country is one with GNI per capita of more than 14,375 in current US$. Historical thresholds are documented.
By markets and economic growth The use of the term "market" instead of "country" usually indicates a specific focus on the characteristics of the countries' financial support system as opposed to the overall economy. Developed countries and developed markets Developing countries include in decreasing order of economic growth or size of the capital market: Newly industrialized countries Emerging markets Frontier markets Least developed countries (also called less economically developed country) Under other criteria, some countries are at an intermediate stage of development, or, as the International Monetary Fund (IMF) put it, following the fall of the Soviet Union, "countries in transition": all those of Central and Eastern Europe (including Central European countries that still belonged to the "Eastern Europe Group" in the UN institutions); the former Soviet Union (USSR) countries in Central Asia (Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan and Turkmenistan); and Mongolia. By 2009, the IMF's World Economic Outlook classified countries as advanced, emerging, or developing, depending on "(1) per capita income level, (2) export diversification—so oil exporters that have high per capita GDP would not make the advanced classification because around 70% of its exports are oil, and (3) degree of integration into the global financial system".
By geography Developing countries can also be categorized by geography: Small Island Developing States (a group of developing countries that are small island countries which tend to share similar sustainable development challenges: small but growing populations, limited resources, remoteness, susceptibility to natural disasters, vulnerability to external shocks, excessive dependence on international trade, and fragile environments). Landlocked Developing Countries (landlocked countries often experience economic and other disadvantages)
By other parameters Heavily indebted poor countries, a definition by a program of the IMF and World Bank Transition economy, moving from a centrally planned to market-driven economy Multi-dimensional clustering system: with the understanding that different countries have different development priorities and levels of access to resources and institutional capacities and to offer a more nuanced understanding of developing countries and their characteristics, scholars have categorized them into five distinct groups based on factors such as levels of poverty and inequality, productivity and innovation, political constraints and dependence on external flows.
By self declaration In general, the WTO accepts any country's claim of itself being "developing." Certain countries that have become "developed" in the last 20 years by almost all economic metrics still insist to be classified as a "developing country," as it entitles them to a preferential treatment at the WTO; countries such as Brunei, Hong Kong, Kuwait, Macao, Qatar, Singapore, and the United Arab Emirates have been cited and criticized for this self-declared status.
Measure and concept of development
Development can be measured by economic or human factors. Developing countries are, in general, countries that have not achieved a significant degree of industrialization relative to their populations, and have, in most cases, a medium to low standard of living. There is an association between low income and high population growth. The development of a country is measured with statistical indices such as income per capita (per person), gross domestic product per capita, life expectancy, the rate of literacy, freedom index and others. The UN has developed the Human Development Index (HDI), a compound indicator of some of the above statistics, to gauge the level of human development for countries where data is available. The UN had set Millennium Development Goals from a blueprint developed by all of the world's countries and leading development institutions, in order to evaluate growth. These goals ended in 2015, to be superseded by the Sustainable Development Goals.
The concept of the developing nation is found, under one term or another, in numerous theoretical systems having diverse orientations – for example, theories of decolonization, liberation theology, Marxism, anti-imperialism, modernization, social change and political economy.
Another important indicator is the sectoral changes that have occurred since the stage of development of the country. On an average, countries with a 50% contribution from the secondary sector (manufacturing) have grown substantially. Similarly, countries with a tertiary sector stronghold also see a greater rate of economic development.
Associated theories The term "developing countries" has many research theories associated with it (in chronological order): Modernization theory – to explain the process of modernization within societies Dependency theory – the notion that resources flow from a "periphery" of poor and underdeveloped states to a "core" of wealthy states, enriching the latter at the expense of the former Development theory – a collection of theories about how desirable change in society is best achieved. Postdevelopment theory – holds that the whole concept and practice of development is a reflection of Western-Northern hegemony over the rest of the world
Criticisms of the term
There is criticism for using the term "developing country". The term could imply inferiority of this kind of country compared with a developed country. It could assume a desire to develop along the traditional Western model of economic development which a few countries, such as Cuba and Bhutan, choose not to follow. Alternative measurements such as gross national happiness have been suggested as important indicators.
One of the early criticisms that questioned the use of the terms "developing" and "underdeveloped" countries was voiced in 1973 by prominent historian and academic Walter Rodney who compared the economic, social, and political parameters between the United States and countries in Africa and Asia.