Is it time to retire the term "developing country"?

Confusion over this terminology has real-world consequences

December 05, 2019
Udo Bernhart/DPA/PA Images
Udo Bernhart/DPA/PA Images
"There is no established convention for [this] designation... in the United Nations system.” Udo Bernhart/DPA/PA ImagesIs South Korea—the 12th biggest economy in the world—a developing country?

It is according to its status at the World Trade Organisation, which entitles the country to certain benefits in trade negotiations. Under pressure from the US, it announced in late October that it will no longer seek to make use of those benefits, though it declined to give up its developing country status, which at the WTO is self-defined. Other economic powers that still identify as developing, including China, are so far refusing to budge.

It might seem surprising that some of the richest countries in the world are still classified as developing. But then again, pinning down the details of this nebulous term can be a challenge. Although most intergovernmental organisations use it as an official classification, few define what it means. And without a clear definition, it is arguably a term that has outlived its purpose.

It might seem odd that the WTO relies on countries to self-designate. But the UN, which identifies 159 countries as developing, explains that “there is no established convention for [this] designation... in the United Nations system.” It is largely based on the regional designations adopted as part of the Millennium Development Goals in 2000, under which North America, Europe, Japan and Australia are considered “developed”—everyone else is developing.

With a focus on the economic elements of developments, the International Monetary Fund is the most specific, taking into account a country’s per capita income level, export diversification and degree of integration into the global financial system. But even then, it notes, its classification system “is not based on strict criteria, economic or otherwise” and offers only “a reasonably meaningful method of organising data.”

Part of the issue is that most of these classifications were set decades ago, and much about the world has changed. If these categorisations were ever fit for purpose, it is not clear that they still are.

First, the conditions of individual countries have changed. South Korea’s per capita income has doubled in real terms over the past two decades, far outpacing the global average. In the UN’s Human Development Index—which scores countries according to a range of indicators on wealth, health and education—it now ranks higher than France. Other countries have undergone similar changes but, without concrete indicators to go by, country designations at the intergovernmental organisations have rarely been updated to reflect this.

Our overall understanding of development worldwide has also changed. In times past, industrialisation was often taken as a proxy for development but, with advancements in technology, that may no longer be the case.

If we look to other indicators, the picture has also become more complex as countries have advanced at different paces and in different ways, and we have come to acknowledge that the challenges of poverty and inequality are not restricted to specific corners of the world. Countries facing entirely different challenges are lumped together as “developing,” while countries in the “developed” category are hardly free of challenges themselves. The US is classified as developed by all major intergovernmental organisations, for example, and yet there are countries classified as developing that beat it on indicators around health care and connectivity. Meanwhile, more people in extreme poverty live in middle-income countries than in low-income countries. When it comes to development, the full picture is often more complex than many of us imagine.

Last but not least, our understanding of the relationships between countries has changed. Just as the terms “first world” and “third world” were eventually cast off as inappropriate, the colonial baggage of the terms “developed” and “developing” is increasingly being acknowledged. Our failure to clearly define the terms speaks to the complexity of development—that it exists on a spectrum, and not in two neat parcels—but also to the fact that our understanding of it is often wrapped up in stereotypes and preconceptions.

In 2016, the World Bank gave up using the terms altogether in favour of the more straightforward lower-, middle- and upper-income countries. But some advocates of the development agenda—that rich countries have a duty to assist lower-income countries with their development—worry about the implications of that change. There is still gross inequality between countries that needs addressing and the categorisations of developed and developing can help in making the case for that.

But if the terms are going to be useful to us, we should be able to say what they mean. If we can't, we may be better off retiring them, as the World Bank did, in favour of something more specific.