While the categories of ‘developed’ and ‘developing’ to describe countries may have been useful in the 1960s, Bill Gates and Hans Rosling—author of the book “Factfulness”—have begun using a new categorical system; four distinct income levels are now recognized as a more accurate way to describe countries and the range between them.

‘Developed’ and ‘Developing’ Countries

The terms ‘developed’ and ‘developing’ have become almost universal terms to describe the economy or wealth of countries. However, there is not one specific definition for these terms. Organizations such as the United Nations use the terms colloquially. However, they never introduced a specific, measurable definition for what actually classifies whether a country is developed or still developing.

In the 1960s, the terms were mostly based on infant mortality and birth rates. Developed countries had lower mortality and birth rates while developing countries had higher infant mortality and birth rates.

But ‘developed’ and “developing” have become outdated in this way, as just about every country in the world has improved infant mortality rates since the 1960s. In fact, some ‘developing’ countries of today have lower infant mortality rates than ‘developed’ countries in 1960.

Overall, the two terms are incapable of separating countries beyond ‘rich’ and ‘poor.’ This is a problem because the majority of people in most countries live somewhere in the middle. In fact, one can label 85% of countries as ‘developed.’ Meanwhile, 15% are in between and one can consider only 6% as “developing” in terms of fertility and mortality rates. That is why Hans Rosling uses four income levels to describe all countries instead.

The Four Income Levels

• Level One: The majority of people live in extreme poverty on a daily income of $2 or less per day. Countries such as Lesotho and Madagascar are currently level one countries. For many people in level one, the main mode of transportation is walking. Some may not even have their own pair of shoes to travel in. In these countries, infant mortality, hunger and preventable disease prevalence are high. Approximately 1 billion people live at this level.
• Level Two: People in countries such as China, Nigeria and Bangladesh generally live on $2 to $8 per day. They may ride a bicycle instead of walking, and they have their own pair of shoes. An estimated 2 billion people live at level two, which is more than any other level.
• Level Three: In countries such as Egypt, Rwanda and the Philippines, about 2 billion people live on $8 to $32 per day. Transportation may include electric bikes, scooters, public transportation and cars. About 2 billion people live at level three.
• Level Four: The wealthiest countries make up level four. The average person having an income of more than $32 per day. There is a large market for nice cars and houses. Simple necessities like clean water and nutritional food are widely available. The United States, Mexico, much of Europe and South Africa are some examples of countries at this income level.

This four-tiered system does not completely account for the variations within countries, but it provides more information than the previous terms. For example, some people living in level one countries are significantly richer than the $2 per day average, and many people living in level four countries experience poverty.

However, organizing countries in this way allows for a more accurate measure of progress. Bill Gates has argued that “It’s hard to pick up on progress if you divide the world into rich countries and poor countries. When those are the only two options, you’re more likely to think anyone who doesn’t have a certain quality of life is ‘poor.’” It is important to properly track global progress and development. We can then use the information to understand where further action must be taken.

A New Official Classification

It is difficult to distinguish between various countries with only two terms. The World Economic Forum stopped using the terms ‘developed’ and ‘developing’ in official reports. Instead, it has used a similar four-tiered categorization since 2016. The World Economic Forum states that it will now collect data “for the whole world, for regions, and for income groups – but not for the ‘developing world’ (or the sum of low and middle income).” Similarly, in 2016, the World Bank released a working paper looking into classifying countries by income as well.

According to Bill Gates, “Any categorization that lumps together China and the Democratic Republic of Congo is too broad to be useful.” Using these levels in data analysis creates a better understanding of variations between countries and their incomes.

– Sydney Bazilian
Photo: Unsplash