Developed Countries

What It Means

The term developed countries is used to designate nations that enjoy high per capita income (average income per citizen), high standards of living (the quality and quantity of goods and services available in a society), long life expectancy (the average expected life span of a nation’s citizens), and other measurements relating to a high quality of life for the individual. Developed countries are also known as First World countries, industrialized nations, advanced economies, and more economically advanced countries.

In addition to their high level of prosperity, all developed countries have several characteristics in common. For one, they are fully industrialized. In other words, developed or industrialized nations are founded on technologically advanced, manufacturing-based economies. Developed countries also share a commitment to free-market economies, or economies based on the law of supply and demand, in which prices are determined by the relationship between the availability of goods (supply) and the desire among consumers for those goods (demand). Some economic experts also regard democratic political institutions, coupled with relatively low levels of political corruption, as essential components of a developed country.

When Did It Begin

The concept of developed countries, as opposed to developing countries (countries characterized by low per capita income, widespread poverty, and an undeveloped economic infrastructure), first emerged during the Cold War (a period of political tension between the United States and the Soviet Union that lasted from the late 1940s until the early 1990s). In 1952 French anthropologist and historian Alfred Sauvy (1898–1990) coined the term Third World (in French, Tiers Monde) to describe the underprivileged status of the world’s impoverished nations. The term soon became synonymous with areas of the globe that were not involved in the ideological conflict between the United States and the Soviet Union. As a rule, these nations were poor, politically unstable, and economically undeveloped; many were former colonies of industrialized nations. As the term Third World became popular, people also began using the expressions First World to mean the United States and Europe and Second World to mean the Soviet Union and its allies. These terms were originally political, used to distinguish the democratic, capitalist (free-market) societies of the West from the communist nations supported by the Soviet Union.

Over time the terms First, Second, and Third World became obsolete. One reason for this was that the dichotomy between the First and Second Worlds ceased to exist after the collapse of the Soviet Union in 1991. Furthermore, the name Third World began to be viewed as pejorative because it implied that poorer nations were somehow inferior to First or Second World nations. As these expressions fell out of use, the terms developed country and developing country, which focused more on economic factors, became more common.

More Detailed Information

Most developed countries are in the western hemisphere, and they include the United States, Canada, and the nations of Western Europe. Australia and New Zealand, both former British colonies, are also developed countries. Although most Asian countries are not considered developed, a few meet the criteria of developed nations (notably Japan, South Korea, Singapore, and Taiwan), as do the administrative regions of Hong Kong and Macau, both of which are controlled by the People’s Republic of China. In the Middle East only Israel is considered a developed country. There are no developed countries in Africa.

Developed countries are generally ranked according to several criteria. One of the most significant is a nation’s gross domestic product, or GDP. GDP refers to the value of all goods and services produced in a country over a set period of time. It accounts for the consumption of goods and services, the total monetary value of a nation’s investments, total government spending, and the difference between a nation’s exports (goods sold to other countries) and imports (goods purchased from other countries). GDP is usually measured on an annual basis. Although GDP offers a fair gauge of whether or not a nation is developed, there are some exceptions. For example, while the GDP in Saudi Arabia is high, the distribution of wealth is uneven, and many people live in poverty.

Another factor used to determine whether or not a nation is developed is the Human Development Index (HDI). HDI measures the well-being of a nation’s citizens (with a particular focus on the welfare of children) according to three categories: standard of living, education and literacy rates, and life expectancy. In 1993 the United Nations, or UN (an international organization dedicated to fostering legal, political, and economic cooperation among various nations), began using HDI ratings to rank countries according to their quality of life. In 2006 Norway ranked the highest, with a rating of 0.965, followed by Iceland (0.960), Australia (0.957), Ireland (0.956), and Sweden (0.950). The United States ranked eighth, with a rating of 0.948. According to economists, developed nations should have an HDI rating of at least 0.8.

Recent Trends

The disintegration of the Soviet Union in the late 1980s and early 1990s caused a major shift in the relationship between the developed countries of Western Europe and the communist republics of Eastern Europe. (Communist countries are governed according to principles of state ownership of property and economic production and the socialization, or sharing, of material and social resources for the use of all citizens.) After breaking free of Soviet influence, a number of former Eastern Bloc countries (a term referring to those Eastern and Central European countries under Soviet political domination) began to implement substantial political and economic reforms. They held democratic elections and launched major industrialization programs in the hope of eventually gaining admittance to the European Union (a confederation of developed democratic nations in Europe originating in the 1950s), commonly known as the EU. For former Eastern Bloc countries membership in the EU was synonymous with achieving “developed nation” status.

By the early twenty-first century a number of Eastern European nations had attained this goal. In 2004 several nations from Eastern and Central Europe, among them the Czech Republic, Hungary, Lithuania, Poland, and Slovenia, earned membership in the European Union, largely because of the stability of their democratic institutions and the overall strengths of their economies. In 2007 Bulgaria and Romania also joined the European Union. While some economists remained cautious about designating these countries as developed, in part because of the relatively recent nature of their industrialization, by the time of their entering the EU they ranked among the world’s most politically stable and economically prosperous nations.