Differences in Development between Countries

The distinction is not just "rich" vs "poor". Each category has a recognisable set of features.

Developed countries

Developed countries have high GDP per capita, advanced industry and services, high HDI (topic 16), and a population structure typical of the later stages of demographic transition.

Typical characteristics:

• High GDP per capita: usually above $25,000 in PPP terms.
• Services-dominated economy. A large share of output and employment is in tertiary activities (finance, retail, healthcare, education, technology). Primary-sector employment is often under 5%.
• High HDI: usually above 0.85.
• Long life expectancy at birth, often above 80.
• Low birth and death rates: completed demographic transition, often near or below replacement fertility.
• High capital stock per worker: modern factories, infrastructure, transport networks.
• Advanced technology and high innovation rates.
• High urbanisation: typically 75%+ of the population live in cities.
• Strong institutions: rule of law, well-functioning courts, low corruption, stable democracy.

Examples: Germany, Japan, the United States, the United Kingdom, South Korea, Australia.

Developing countries

Developing countries have lower GDP per capita, a much larger primary sector, lower HDI, and a population structure earlier in the demographic transition.

Typical characteristics:

• Lower GDP per capita: usually well below $15,000 in PPP terms.
• Larger primary sector. Agriculture, mining, fishing and forestry account for a much higher share of employment, sometimes 40% or more.
• Lower HDI: usually below 0.75.
• Shorter life expectancy, often 65–75 years.
• Higher birth and death rates: earlier in the demographic transition.
• Lower capital stock per worker: fewer machines, less developed infrastructure.
• Lower technology levels and slower innovation.
• Lower urbanisation, with a large rural population.
• Weaker institutions, with higher corruption and more political instability in many cases.

Examples: India, Nigeria, Bangladesh, Kenya, Vietnam, Bolivia.

Both categories cover a wide range. "Developing" includes both least-developed countries (very low income, weak institutions) and emerging-market economies (middle income, fast-growing) like India, Brazil and Vietnam. A single label hides huge variation.

Structural change as countries develop

As countries grow richer, the structure of their economy changes in a consistent pattern.

The progression is primary → secondary → tertiary as a country develops. Alongside this, urbanisation rises and birth and death rates fall (the demographic transition from topic 17).