Developing Countries

What It Means

Developing countries are nations that have a low per capita income (average annual income per person), a low standard of living (availability of quality goods and services for average citizens), low life expectancy (number of years of the average person’s life span), high infant-mortality rates, widespread poverty, and an underdeveloped economy. The economies in developing countries are generally based on agricultural production or natural-resource extraction (for example, oil, coal, or metals) rather than industry (manufacturing). In this sense one of the defining characteristics of a developing country is that it is not industrialized.

Developing countries often have underdeveloped political and judicial systems, inadequate social services, and high levels of government corruption. Until the 1990s many were undermined by rapid population growth, which placed great strain on their food supply and other resources; since that time many of the poorest countries have seen life expectancy and populations fall because of the HIV/AIDS epidemic. In many cases developing countries are former colonies of more powerful developed countries (countries with high per capita incomes, high standards of living, and long life expectancies).

Other names for developing countries include underdeveloped nations, less developed nations, and Third World countries. Such countries are predominantly found in Asia, Latin and Central America, and Africa.

When Did It Begin

Developing countries were originally known as Third World countries. The designation Third World dates to 1952, when the French historian and anthropologist Alfred Sauvy (1898–1990) coined the term to describe economically underdeveloped countries whose needs were largely ignored by the more advanced, powerful nations of the world. The term Third World (Tiers Monde in French) is derived from Third Estate, a French term for portions of the population, generally peasants, who were not members of the First Estate (the aristocracy) or the Second Estate (the clergy).

The term Third World quickly became associated with nations that were not aligned with either the United States or the Soviet Union in the Cold War (a period of ideological conflict between the two countries that lasted from the late 1940s to the early 1990s). Subsequently the United States and its allies became known as the First World, while the Soviets and other communist states became known as the Second World.

Over time the term developing countries replaced Third World; many people had begun to regard the latter as derogatory because it was reminiscent of European colonialism (the practice by which European nations created settlements, or colonies, in poorer countries for the purpose of exploiting the natural resources and labor force of those countries). Toward the end of the twentieth century, however, some political economists also began to question the designation developing country because many of the world’s so-called developing nations were economically stagnant, demonstrated no signs of becoming industrialized, and had even shown indications of economic decline.

More Detailed Information

In the second half of the twentieth century there emerged several key organizations dedicated to assisting developing countries. One of the most influential of these organizations has been the World Bank Group, an association of five global agencies that fosters economic development in poorer, unindustrialized nations, with the ultimate aim of eradicating world poverty. The first of these agencies, the International Bank for Reconstruction and Development (IBRD), was formed in the years following World War II (1939–45) and was originally dedicated to providing economic assistance to European and Asian countries in the aftermath of the conflict. One of its first loans was intended to help with the postwar reconstruction of France. From the mid-1950s to mid-1960s, other agencies joined with the IBRD to create the World Bank Group.

Over the years the World Bank Group has extended its efforts to include providing aid to developing nations, particularly in Africa. One way that the World Bank Group has tried to stimulate economic development is by helping developing countries to implement policy reform (that is, modify their government’s economic and social policies), with the aim of creating conditions that will enable free-market trading with the world’s more prosperous, developed countries. These reforms are often accompanied by large grants and loans that are to be used for improving infrastructure (for example, roads, water supplies, energy generation and distribution, and other aspects of a society that allow it to operate productively and efficiently) and providing educational opportunities for the country’s citizens. The World Bank has also played a significant role in providing financial assistance to countries suffering from the epidemic of AIDS (an infectious viral disease that destroys the human immune system and is rampant in developing countries). In the first years of the twenty-first century, the World Bank spent more than $2 billion on programs designed to help eradicate the disease.

In 1990 the Pakistani economist Mahbub ul Haq (1934–98) created the Human Development Index, or HDI, a method of measuring the quality of life of a nation’s citizens. The HDI focuses on three factors: life expectancy, literacy rates, and standard of living. In 1993 the United Nations (an international organization intended to foster peace, security, and friendly relations among countries) began using the HDI to gauge economic and living conditions in developing countries worldwide, and it published its findings annually in its Human Development Report. The Human Development Report also provides a periodic analysis of global efforts to fight poverty, hunger, and disease in developing countries. In 2005 the report stated that, while financial assistance had increased since the late 1990s, it was still inadequate to meet the needs of most of the world’s most impoverished nations.

Recent Trends

Toward the end of the twentieth century, the rise of globalization (the process by which the economies of different nations become integrated) seemed to offer developing countries new opportunities for economic development. The World Trade Organization (WTO) was created in 1995 in order to facilitate international trade in the increasingly global economy; its goals included reducing trade barriers between nations, promoting fair business practices worldwide, and mediating trade disputes between nations. One of the stated priorities of the WTO was to create economic growth in the world’s developing countries by promoting international trade reform and encouraging industrialization in those nations. By 2006 the WTO had more than 150 member nations, the majority of which were developing countries.

In spite of its pledge to help developing nations take advantage of the global economy, the WTO soon became an object of intense criticism. Opponents of the WTO, many of them from developing countries, complained that the organization demonstrated an unfair bias toward the interests of the world’s developed nations, particularly the United States and European countries. Critics focused primarily on the fact that the United States and Europe closed their markets to most agricultural products from the poorest countries. In addition, many critics of the WTO also voiced concerns about issues of environmental protection and fair labor practices, arguing that the organization’s economic policies actually increased pollution levels and promoted the exploitation of workers in developing nations.