Differences Between Developing And Developed Countries

	Developed Countries	Developing countries
GDP Per Capita	Income from production of high value goods + services Highly skilled labour force Capital intensive production methods	Income predominantly from agricultural goods Prices of agricultural goods tend to be low so generates low income Oil v Wheat? Protection policies such as tariffs imposed on agricultural goods by some countries This reduces export revenue for developing countries
GDP Per Capita Impact on Economic Performance	Good level of income allows for development in services and infrastructure and in improving education and productivity	Poorer countries struggle to earn income they need to improve economic development They may be forced to borrow money from abroad to invest in their economies resulting in increased foreign debt (interest payments)
Distribution of Income and Wealth	Efficient progressive tax systems in place Provide welfare benefits to the poor	Have larger informal (Black Market) economies, making tax collection difficult Therefore have less revenue to spend on welfare and public services like education, healthcare so the cycle continues More likely to suffer from corruption
Distribution of Income and Wealth Impact on economic Performance	Absolute poverty largely eradicated from developed countries (but relative poverty still a concern)	More people living in absolute poverty
Productivity	Higher productivity level due to a skilled labour force and investment in modern technology	More unskilled labour due to poor education system and limited training opportunities Do not have the money to invest in capital equipment and machinery will lead to lower productivity
Productivity Impact on economic Performance	Economic growth more likely as productivity and output should improve year on year so revenue should improve too	Relatively unskilled leads to fewer products and services produced and lower income as a result Less revenue available to invest in improving their economies
Population growth	Slow population growth rates due to women choosing careers, marrying later, having fewer children High cost of raising children another factor for lower birth rates	Rapidly growing population due to high birth rates (poorest regions in Africa have 2.7% rith rate compared to 0.4% in EU)
Population growth Impact on Economic Performance	May need to plan for a ageing population e.g. Japan, china	Rapid birth rates put strain on resources Absolute poverty may rise as population grows Tend to have larger dependent populations putting on pressure on the working population e.g. 51% of Niger’s population aged under 14
Size of Primary, secondary, tertiary Sector	Mainly have jobs in the tertiary sector which requires a higher level of education and skill	High proportion of workers in primary sector
Size of Primary, secondary, tertiary Sector – Impact on Economic development	Farming tends to be capital intensive cheaper to produce and output more productive	Farming tends to be labour intensive so workers more unskilled so receive low wages and risk of drought and crop failure
Saving and Investment	Higher income enable them to save and invest more in capital equipment and development of new technology to increase productivity and expand output	Lower revenues results in less opportunity to save and invest so productivity unlikely to improve
Saving and Investment Impact on economic Development	Money makes money	Trapped in poverty cycle Have to borrow to invest leads to high levels of debt Interest rates tend to be high
Education	High quality school education accessible for all, many go on to university results in ever improving skilled workforce	Lack income to invest in education as a result skills level and productivity of the labour force likely to be low Poor education makes it difficult to raise themselves out of poverty
Education Impact on economic Development	Higher economic growth and improving productivity	Without education many trapped in inter generational poverty (People born into poverty likely to be trapped in poverty due to low education) Results in low economic growth and productivity
Healthcare	Higher standard of medical care accessible to all Better access to healthier foods, clean water	May lack access to basic medical care such as vaccinations to prevent disease Safe water and sanitation may not be accessible increase spread of life threatening disease
Healthcare Impact on Economic development	Life expectancy higher many of which have an ageing population, as a result higher taxes may be in place to fund pensions and health services Number of elderly people living in relative poverty may rise	Life expectancy lower and poor health will reduce productive capacity. Swaziland 49 Japan 84
Infrastructure	More money to invest in roads, communications, housing, transport links	Lack funds to invest in infrastructure which results in poor roads and unreliable power supply
Infrastructure Impact on economic development	Attracts investment from Private business and FDI (Foreign Direct Investment)	Poor infrastructure reduces productive capacity and discourages investment

Understanding the distinctions between developing and developed countries is crucial for policymakers, investors, and anyone interested in global economics. These differences span various aspects, including GDP per capita, income distribution, productivity, population growth, sector sizes, saving and investment, education, healthcare, and infrastructure. In this blog, we’ll delve into each of these areas to provide a clear comparison between developing and developed nations.

GDP Per Capita
Income Distribution and Wealth
Productivity
Population Growth
Size of Primary, Secondary, Tertiary Sectors
Saving and Investment
Education
Healthcare
Infrastructure
Conclusion

GDP Per Capita

Developed Countries

High GDP Per Capita: Developed nations boast a high GDP per capita, primarily generated from the income of high-value goods and services.
Economic Impact: A robust income level facilitates advancements in services, infrastructure, education, and overall productivity, driving sustained economic growth.

Developing Countries

Low GDP Per Capita: Income in developing countries is predominantly from agricultural goods, which often have low market prices, resulting in minimal income.
Economic Impact: Limited income restricts economic development, forcing these nations to borrow from abroad, which increases foreign debt and hampers growth.

Income Distribution and Wealth

Developed Countries

Efficient Tax Systems: Implement progressive tax systems that effectively redistribute wealth.
Welfare Benefits: Comprehensive welfare programs support the poor, reducing absolute poverty.

Developing Countries

Large Informal Economies: A significant black market presence makes tax collection challenging, limiting government revenue for public services.
Corruption Issues: Higher corruption rates impede equitable wealth distribution and access to essential services like education and healthcare.

Economic Impact

Developed Countries: Reduced poverty levels and efficient wealth distribution enhance economic stability and growth.
Developing Countries: Persistent poverty and income inequality hinder economic progress and maintain the cycle of poverty.

Productivity

Developed Countries

High Productivity: Driven by a skilled labor force and advanced technology, leading to increased output and economic efficiency.

Developing Countries

Low Productivity: Limited access to education and training results in a predominantly unskilled workforce, reducing overall productivity.

Economic Impact

Developed Countries: Continuous economic growth fueled by rising productivity and innovation.
Developing Countries: Lower productivity stifles economic expansion and limits income growth.

Population Growth

Developed Countries

Slow Growth Rates: Factors such as women pursuing careers, delayed marriages, and high child-rearing costs contribute to lower birth rates.

Developing Countries

Rapid Growth Rates: High birth rates, especially in regions like Africa, lead to a rapidly increasing population.

Economic Impact

Developed Countries: Aging populations may require adjustments in social services and pensions.
Developing Countries: Rapid population growth strains resources, increases absolute poverty, and places pressure on the working-age population.

Size of Primary, Secondary, Tertiary Sectors

Developed Countries

Dominance of Tertiary Sector: Employment is mainly in services, which require higher education and skills.

Developing Countries

Prevalence of Primary Sector: A large portion of the workforce is engaged in agriculture and other primary industries.

Economic Impact

Developed Countries: Capital-intensive farming and advanced services boost productivity and income.
Developing Countries: Labor-intensive agriculture leads to lower wages and vulnerability to environmental factors.

Saving and Investment

Developed Countries

Higher Savings Rates: Greater income levels enable significant savings and investments in capital equipment and technology.

Developing Countries

Lower Savings Rates: Limited revenue restricts opportunities to save and invest, perpetuating low productivity levels.

Economic Impact

Developed Countries: Continuous investment fosters economic growth and technological advancements.
Developing Countries: High debt levels and low investment impede economic development and perpetuate poverty cycles.

Education

Developed Countries

Accessible Quality Education: Universal access to high-quality education leads to a skilled and productive workforce.

Developing Countries

Limited Educational Investment: Insufficient funding results in low education levels and limited training opportunities.

Economic Impact

Developed Countries: Enhanced education drives economic growth and innovation.
Developing Countries: Poor education systems trap populations in intergenerational poverty, limiting economic progress.

Healthcare

Developed Countries

Comprehensive Healthcare Systems: Accessible medical care, clean water, and healthy food contribute to high life expectancy.

Developing Countries

Basic Healthcare Challenges: Limited access to essential medical services increases disease prevalence and lowers life expectancy.

Economic Impact

Developed Countries: Higher life expectancy supports an aging population but requires substantial funding for pensions and health services.
Developing Countries: Poor health reduces workforce productivity and increases mortality rates, hindering economic development.

Infrastructure

Developed Countries

Advanced Infrastructure: Investments in roads, communication, housing, and transportation enhance economic efficiency and attract investment.

Developing Countries

Underdeveloped Infrastructure: Poor roads, unreliable power supply, and inadequate transport links discourage investment and limit productive capacity.

Economic Impact

Developed Countries: Superior infrastructure attracts foreign direct investment (FDI) and supports robust economic activity.
Developing Countries: Inadequate infrastructure hampers economic growth and deters both domestic and foreign investment.

Conclusion

The disparities between developing and developed countries are multifaceted, encompassing economic, social, and infrastructural dimensions. Developed nations benefit from high GDP per capita, efficient income distribution, skilled labor forces, advanced technology, and robust infrastructure, all of which drive sustained economic growth and high living standards. In contrast, developing countries face challenges such as low income levels, income inequality, limited educational and healthcare resources, and inadequate infrastructure, which hinder their economic development and perpetuate cycles of poverty.