What Are The Key Differences Between Developed, Developing, And Least Developed Countries?

Countries around the world are often grouped into three categories: developed, developing, and least developed. These groups help us understand how countries differ in terms of economy, living standards, and infrastructure.  

Developed countries have robust economies, advanced technology, and a high standard of living. People typically have access to good healthcare, education, and employment opportunities.  

Developing countries are experiencing growth but still face numerous challenges. Their economies are improving, but many people may still face poverty, limited access to services, or unstable systems.  

The least developed countries are the poorest. They often lack necessities such as clean water, education, and healthcare. Their economies are weak, and many people live in difficult conditions.  

In this article, we'll examine the unique characteristics of each group, their classification, and the significance of these differences in today's world.

What Defines Developed Countries?

A developed economy is highly productive and provides a high standard of living. It's often measured by a country's Gross Domestic Product (GDP) per capita, which is the total value of all goods and services produced in a nation divided by its population.

In developed countries, this number is high, indicating that people have more disposable income to spend and greater access to goods and services. Examples include:

• United States
• Canada
• United Kingdom
• Germany
• France
• Italy
• Japan
• Australia
• Norway
• Switzerland
• Sweden
• Denmark
• Netherlands
• Finland
• Belgium
• Austria
• Iceland
• New Zealand
• South Korea
• Singapore
• Spain
• Portugal
• Ireland
• Luxembourg
• Israel
• Greece
• Slovenia
• Estonia
• Czech Republic
• Slovakia
• Lithuania
• Latvia
• Poland
• Malta
• Cyprus
• Hungary

1. High Levels Of Industrialisation

Developed countries have moved past an economy based on agriculture and raw materials. Their economies are now driven by manufacturing, as well as services and technology. 

The focus has shifted from manufacturing goods to providing services, such as banking, software development, and research. This means a smaller percentage of the workforce is employed in manual labour, and a larger portion works in knowledge-based jobs.

2. Advanced Technological Infrastructure

A key feature is having a robust, modern infrastructure. This includes high-speed internet, reliable power grids, efficient transportation networks (such as highways, railways, and airports), and advanced communication systems. 

This technology and infrastructure support the country's economy, making businesses and daily life more efficient. It also enables continuous innovation and research, which, in turn, leads to further economic growth.

3. High Gross Domestic Product (GDP) Per Capita

GDP per capita is the total value of all goods and services produced in a country in a year, divided by the country's population.

A high GDP per capita means that, on average, each person in the country contributes more to and benefits more from the economy. This is a crucial indicator of a country's economic prosperity, directly linked to higher wages and a better quality of life.

4. Strong Healthcare And Education Systems

Developed countries invest heavily in their people. They have strong, well-funded healthcare systems, which lead to a high life expectancy and a low infant mortality rate. 

Similarly, their education systems, from elementary school to universities, are top-notch. This ensures a highly skilled and educated population, which is essential for a modern, knowledge-based economy to thrive and innovate.

How Are Developing Countries Characterised?

Developing countries, often referred to as "emerging economies", are nations characterised by a lower standard of living, an underdeveloped industrial base, and a Human Development Index (HDI) ranking of low to medium. 

They are in the process of industrialising and improving the quality of life for their citizens. Examples include:

• Brazil
• China
• India
• Indonesia
• Malaysia
• Mexico
• Philippines
• South Africa
• Turkey
• Argentina
• Thailand
• Vietnam
• Egypt
• Peru
• Colombia
• Nigeria
• Kenya
• Bangladesh
• Russia
• Iran
• Saudi Arabia
• Ukraine
• Sri Lanka
• Pakistan
• Morocco
• Algeria
• Tunisia
• Jordan
• Chile
• Ecuador
• Costa Rica

1. Moderate Levels Of Industrialisation

Unlike developed nations that have shifted to service- and tech-based economies, developing countries often have a large portion of their economy and workforce in manufacturing and agriculture. 

While they are industrialising, their factories and industries may not be as technologically advanced or efficient. The emphasis is on building a strong industrial base to create jobs and goods, rather than on highly specialised services.

2. Growing Economies With Diverse Sectors

While a significant portion of the economy in developing countries may still be based on farming or raw material extraction, these countries are actively diversifying their economies. 

This means they are building up other economic sectors, such as manufacturing, construction, and services.

This growth is often faster than in developed countries because they are starting from a lower base, which presents both opportunities and challenges.

3. Improving Healthcare And Education Systems

Developing countries are working to improve their social services, but they face significant challenges. They often have limited access to quality healthcare, leading to lower life expectancies and higher infant mortality rates compared to developed nations. 

Similarly, while education is a priority, literacy rates may be lower, and access to higher education can be limited. These systems are constantly being improved as the economy grows.

4. Higher Poverty Rates Compared To Developed Countries

A defining characteristic is that a significant portion of the population lives in poverty. This can be attributed to a variety of factors, including low wages, high unemployment, and limited access to basic resources such as clean water and proper sanitation. Economic growth aims to reduce these poverty rates and raise the overall standard of living for all citizens.

What Criteria Classify Least Developed Countries?

The United Nations classifies a country as a Least Developed Country (LDC) based on three main criteria that are reviewed every three years by the Committee for Development Policy (CDP). To be added to the list, a country must meet the thresholds for all three criteria.

1. Low Income

This criterion is based on the country's Gross National Income (GNI) per capita, averaged over a three-year period. A country must have a very low GNI per capita to be considered an LDC. 

This is a primary indicator of a country's overall economic well-being and population productivity. It reflects the limited financial resources available to the government and its citizens.

2. Weak Human Assets

This is measured by the Human Assets Index (HAI), which looks at a country's performance in health and education. It includes indicators such as:

• Health: under-five child mortality rate and maternal mortality ratio.
• Education: adult literacy rate and secondary school enrollment.
• A low score on the HAI indicates that the population lacks sufficient access to basic health and educational services, which are essential for personal development and economic progress.

3. High Economic and Environmental Vulnerability

This is determined by the Economic and Environmental Vulnerability Index (EVI). This index measures a country's susceptibility to external shocks from both economic and natural factors. It includes indicators like:

• Economic Vulnerability: instability of agricultural production and exports, and the concentration of a country's exports in a few products.
• Environmental Vulnerability: a high percentage of the population living in areas vulnerable to disasters, like low-lying coastal zones or drylands.

A high EVI score indicates that the country's economy and population are vulnerable to external shocks, such as sudden changes in global market prices or natural disasters, that they cannot control.

The UN recognises 44 countries as least developed countries (LDCs) due to their low income, weak human assets, and high vulnerability:

Africa

Angola, Benin, Burkina Faso, Burundi, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Rwanda, Senegal, Sierra Leone, Somalia, South Sudan, Sudan, Togo, Uganda, Tanzania, Zambia

Asia

Afghanistan, Bangladesh, Cambodia, Laos, Myanmar, Nepal, Timor-Leste, Yemen

Oceania

Kiribati, Solomon Islands, Tuvalu

Americas

Haiti

Why Do Economic Disparities Exist Among These Categories?

Economic disparities between developed, developing, and least developed countries persist due to a cycle of interconnected challenges. These nations have varying levels of income, human well-being, and resilience to external challenges, which all interact with one another.

1. Low Gross National Income (GNI) Per Capita  

A nation's GNI per capita is a key indicator of its overall economic health. Developed countries have a high GNI per capita, meaning they have a lot of wealth to invest in infrastructure, technology, and social services. 

In contrast, LDCs and many developing countries have a low GNI per capita. This makes it difficult for them to save money, attract investment, and build the foundation needed for a modern economy. This lack of initial wealth traps them in a cycle of limited resources and slow growth.

2. Weak Human Development Indicators (HDI)  

A country's development isn't just about money; it's also about its people. The Human Development Index (HDI) measures a population's health and education. LDCs and developing countries often have low HDI scores due to poor access to healthcare and education. 

A population with a short life expectancy and limited access to education is less likely to be productive or innovative. 

This creates a workforce that lacks the skills needed to move from a basic, low-wage economy to a more advanced, high-tech one. This, in turn, keeps their GNI per capita low, reinforcing the cycle.

3. Vulnerability To Economic And Environmental Shocks  

LDCs and developing countries are often more susceptible to external shocks, such as natural disasters, climate change, or sudden changes in global commodity prices. Their economies are typically narrowly focused on a few agricultural products or raw materials, making them highly vulnerable to international price fluctuations. 

They also lack the financial reserves and infrastructure to recover quickly from a disaster. In contrast, developed countries have diverse economies and robust financial systems that can absorb these shocks, enabling them to recover much more rapidly.

4. Limited Access To Education And Healthcare

This is a direct consequence of the issues mentioned above and a significant contributing factor to them. Without sufficient funding, it's impossible to build and maintain strong education and healthcare systems. 

Poor education limits a population's skills and reduces their ability to innovate and earn higher wages. Lack of proper healthcare leads to higher rates of disease and death, which reduces a nation's workforce and its overall productivity. 

These factors prevent a country from developing the human capital necessary for sustained economic growth, thereby perpetuating the gap between rich and poor nations.

What are on the IMF list of Developed Countries 2025?

The IMF classifies developed countries under the grouping "advanced economies". For 2025, the official list includes North America, Western Europe, select Asia-Pacific nations, and some smaller states.

2025 IMF "Advanced Economies" List

The following countries and territories are recognised as developed by the IMF:

• United States
• Canada
• Japan
• South Korea
• Australia
• New Zealand
• Singapore
• Hong Kong SAR
• Taiwan Province of China
• Israel
• Euro Area countries (Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, Spain)
• United Kingdom
• Norway
• Sweden
• Denmark
• Switzerland
• Iceland
• Czech Republic
• Croatia
• San Marino
• Andorra
• Monaco
• Liechtenstein