What are the three features of a developed country?

A developed economy means an economy (country) with a high level of economic activity characterized by high per capita income or per capita gross domestic product (GDP), high level of industrialization, developed infrastructure, technological advancement, and a relatively high rank in human development, health and education.

Table of contents

• What is a Developed Economy?
  • Characteristics of Developed Economies
    • #1 – High Income
    • #2 – High Human Development Rank
    • #3 – Service Sector Domination
    • #4 – Technological Advancements
    • #5 – High Level of Infrastructure Development
  • Developed Economy Formula
  • Examples of a Developed Economy
  • Advantages
  • Disadvantages
  • Limitations
  • Important Points
  • Conclusion
  • Recommended Articles

Characteristics of Developed Economies

The following are the characteristics of developed economies.: –

You are free to use this image on your website, templates, etc., Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Developed Economy (wallstreetmojo.com)

#1 – High Income

They have a high income as measured by per capita income. The definition of high income varies from institution to institution. The World Bank categorizes a per capita income of $12,376 or above as high income. Any country with per capita income above this threshold and high rank in other factors qualifies to be in the developed countries list.

As per World Bank, 80 countries in the world make it to the high-income countries (GNI per capita) list, topped by Switzerland ($83,580), Norway ($80,790), Iceland ($67,950), and the United States ($62,850).

#2 – High Human Development Rank

Along with being rich, citizens of this economy should also experience a better quality of life which can be gauged by many factors, including but not limited to literacy rates, life expectancy, infant mortality rates, and access to healthcare. As a result, the United Nations (UN) developed and compiled the Human Development Index (HDI). The UN releases the index periodically to assess the change in the quality of life in different countries.

As per the United Nations, Norway and Switzerland rank at the top in HDI with 0.953 and 0.944, respectively. On the other hand, the United States ranks 13th with an HDI of 0.924, followed by the United Kingdom with an HDI of 0.922.

#3 – Service Sector Domination

As the economy achieves developed status, the service sectorService SectorThe service sector or tertiary sector refers to one of the portions forming the three-sector model of the economic sector. The businesses in the service industry produce intangible goods in the form of service as output delivering to other businesses or consumers.read more becomes a bigger part. The manufacturing is left to other developing countries while developed economies focus on innovation and developing futuristic value-added products.

#4 – Technological Advancements

They are much more technologically advanced due to their skilled workforce and the risk-taking built into their culture. Also, embrace newness, so people are deeply involved in discovering advanced technologies in multiple fields.

#5 – High Level of Infrastructure Development

They are big investors in infrastructure development, which leads to even faster economic growthEconomic GrowthEconomic growth refers to an increase in the aggregated production and market value of economic commodities and services in an economy over a specific period.read more. The quality of roads, rail, air, water, and civil infrastructure is superior to that of less developed or underdeveloped countries.

Developed Economy Formula

There is no straightforward formula that can help label an economy as developed or developing. An economy can be called developed only when it ranks high on several parameters, including per capita income, quality of life of the citizens, health, education, and technological advancement. An economy that ranks high in any one of the parameters but falters on others cannot be developed.

Examples of a Developed Economy

The United States, United Kingdom, Canada, Norway, Switzerland, Japan, and South Korea are real-world examples. These economies can be termed as developed economies due to their high level of national incomeNational IncomeThe national income formula calculates the value of total items manufactured in-country by its residents and income received by its residents by adding together consumption, government expenditure, investments made within the country and its net exports.read more (gross national income of above $12,376) and high ranking in the human development index (HDI) (above 0.850), enhanced level of infrastructure development, highly developed industrial base, and a better quality of life of its citizens.

You are free to use this image on your website, templates, etc., Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Developed Economy (wallstreetmojo.com)

Advantages

There are several different advantages: –

• These economies generally are easier to do business in, which leads to higher job creation.
• It gives higher freedom of expression to its citizens, which results in the constructive development of the country and its citizens.
• These economies are more powerful and secure than underdeveloped and developing economies.
• These economies add value to the quality of life and business by constantly innovating.
• They have developed technological leadership as most cutting-edge technology is developed in these nations, then adopted by other countries.
• These economies have a well-trained workforce as they invest heavily in education and skill development.
• These economies are more efficient in capital and resource allocation than developing economies.
• It has a low cost of capital.
• Developed countries generally adopt free trade and free-market principles for faster economic development.
• It helps other underdeveloped countries to improve their economy and bring their people out of poverty.
• Developed countries help less developed or developing countries in various humanitarian and developmental causes.
• As developed economies have a long track record in governance and management, they copy and adapt build models to build their models for faster development.

Disadvantages

There are several different disadvantages: –

• Due to the free marketFree MarketA free market refers to an economic system free from government interventions and controlled by privately owned businesses.read more, these economies build a lot of economic excesses that lead to crises. One good example is the 2008-2009 subprime financial crisisFinancial CrisisThe term "financial crisis" refers to a situation in which the market's key financial assets experience a sharp decline in market value over a relatively short period of time, or when leading businesses are unable to pay their enormous debt, or when financing institutions face a liquidity crunch and are unable to return money to depositors, all of which cause panic in the capital markets and among investors.read more, wherein the entire world suffered because of inappropriate ways of doing the business of a few institutions.
• These economies are more powerful and sometimes exert undue pressure on developing nations.
• Income inequalityIncome InequalityIncome inequality refers to the crucial imbalance of income dispersal across the population.read more is widely prevalent in developed economies, leading to poor living standards and distrust of people in the lower strata of society.

Limitations

• Few of these economies are running big budget deficitsBudget DeficitsBudget Deficit is the shortage of revenue against the expenses. The budgetary deficit could be the sum of deficit from revenue and capital account. read more, which can derail their economies in the future.
• These economies have created a lot of populist excesses, exerting significant pressure on the current generation to fund retirees and pensioners.

Important Points

• Few of these economies are now facing the brunt of competition from less developed economies and are trying to protect themselves by closing or limiting access to their economies.
• Due to globalizationGlobalizationGlobalization is defined as the extension of trade, commerce and culture of an economy across different nations.read more, anything going wrong in these economies impacts other countries worldwide.

Conclusion

Developed economies have strong legacies. These economies are powerful and play an important role in maintaining peace worldwide. They are the role models for many developing economies like China and India. These economies also offer great opportunities to developing nations to open their market for goods and services supplied by the developing economies. While there are some setbacks, the net effect of developed economies is generally positive. The world benefits immensely from the financial support and technological strength of all such economies.

Recommended Articles

This article has been a guide to What is a Developed Economy?. We discussed developed economy features with the definition, examples, advantages, and disadvantages. You can learn more from the following articles: –

• Formula for Microeconomics Formula For MicroeconomicsMicroeconomics is a branch of Economics that evaluates, analyzes, & studies the performance of firms & individuals towards delivering sustainable results through employing scarce resources. Also, it examines the interaction between these firms & individuals. read more
• Per Capita Income FormulaPer Capita Income FormulaThe per capita income formula depicts the average income of a region computed by dividing the total income of that area by the total population of the region. It is used to figure out the average income of a city, provision, state, country, etc.read more
• Shared Economy Shared EconomyShared economy is based on the idea of person-to-person lending where people share resources owned by them. It happens for a price that is quite competitive in comparison to the organized and traditional businesses in the respective area.read more
• Indexation FormulaIndexation FormulaIndexation is a technique to adjust the amount byways of a price index to maintain the purchasing power after excluding the effect of inflation. Indexation = Original cost of acquisition x CII of the given year / CII of the base year

  What are the features of a developed country?

  A developed country—also called an industrialized country—has a mature and sophisticated economy, usually measured by gross domestic product (GDP) and/or average income per resident. Developed countries have advanced technological infrastructure and have diverse industrial and service sectors.

  What are 3 examples of a developed country?

  Examples of developed nations include the United States, the United Kingdom, and the majority of Western and Northern Europe, such as Germany, France, Denmark, and Sweden.

  What are three characteristics of a developed country?

  Characteristics of Developed Countries.

  Has a high income per capita. Developed countries have high per capita incomes each year. ... .

  Security Is Guaranteed. ... .

  Guaranteed Health. ... .

  Low unemployment rate. ... .

  Mastering Science and Technology. ... .

  The level of exports is higher than imports..

  What are 4 characteristics of a developed country?

  Standard criteria for evaluating a country's level of development are income per capita or per capita gross domestic product, the level of industrialization, the general standard of living, and the amount of technological infrastructure.