Differences in Development between Countries

Not every country follows the same path, but the historical pattern of successful development looks roughly like this:

1. Stage 1. Primary-sector dominated, low income, high birth rates, low capital and education.
2. Stage 2. Investment in basic education, healthcare and infrastructure. Growth begins. Manufacturing starts.
3. Stage 3. Industrialisation accelerates. Exports of manufactured goods rise. Urbanisation moves quickly. Birth rates begin to fall.
4. Stage 4. Services start to overtake manufacturing. Income approaches middle-income levels. Human capital rises.
5. Stage 5. High-income, services-dominated, advanced manufacturing, near-complete demographic transition.

Countries that have climbed this ladder fast in recent decades (South Korea, Singapore, Taiwan, China, Ireland) typically combined trade openness, FDI inflows, heavy investment in human capital, strong institutions and a stable macroeconomic environment. Countries stuck in early stages usually have weakness in at least one of these areas.

Convergence between developed and developing countries has been uneven: some developing countries are catching up rapidly while others continue to lag behind. The development gap is not closing automatically.