Economic development
Economic development is a broader concept than economic growth. It encompasses improvements in living standards, health, education and freedoms. Economists use indicators like the Human Development Index (HDI), literacy rates and life expectancy to compare development across countries.
Characteristics of developed and developing countries
| Feature | Developed economies | Developing economies |
|---|---|---|
| Income per capita | High GDP/GNI per capita; diversified industrial and services sectors | Low to middle income; reliance on agriculture or primary commodities |
| Industrial structure | Majority of employment in services and high‑tech manufacturing | Large share of employment in agriculture and informal sector |
| Infrastructure | Well‑developed transport, energy and telecommunications networks | Poor infrastructure hinders productivity and trade |
| Health and education | High life expectancy, low infant mortality, widespread access to education | Lower life expectancy, higher infant mortality, lower literacy rates |
| Technology and innovation | Advanced technology, research and development expenditure | Limited access to technology; dependence on imported know‑how |
| Governance and institutions | Stable political systems, strong property rights, low corruption | Political instability, weak institutions and corruption may hinder growth |
Reasons for differences in development
- Natural resources – availability of fertile land, minerals and energy resources affects productive capacity.
- Human capital – education and health determine the productivity of the workforce.
- Geography and climate – landlocked countries or those prone to natural disasters may face additional challenges.
- History and institutions – colonial legacy, political stability, corruption and rule of law influence development.
- Technology and innovation – access to modern technology boosts productivity.
- Trade and openness – participation in global trade allows countries to specialise and benefit from comparative advantage.
Policies to promote development
Strategies include investing in education and healthcare, building infrastructure, improving governance, encouraging entrepreneurship, attracting foreign direct investment, and diversifying the economy. International assistance and fair trade rules can support poorer countries’ development efforts.
Examples and applications
Norway is consistently ranked among the world’s most developed countries. It combines high income per capita with universal healthcare, free education and strong institutions. Revenues from oil production are managed in a sovereign wealth fund to support public services and future generations.
Bangladesh illustrates the challenges faced by developing countries. Rapid growth in the textile industry has created jobs and lifted incomes, but the country still struggles with inadequate infrastructure, periodic flooding and limited access to education in rural areas. Investments in roads, schools and healthcare are critical to sustaining development.
Singapore’s rise from a poor port city to a high‑tech hub demonstrates the importance of good governance, openness to trade and investment in human capital. In contrast, countries plagued by political instability and corruption often find it difficult to attract investment and achieve sustained development.
