Developing Countries: Definitions, Concepts and Comparisons (CRS Report for Congress)
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| Release Date |
Dec. 6, 2002 |
| Report Number |
RL31662 |
| Report Type |
Report |
| Authors |
Jonathan E. Sanford and Anjula Sandhu, Foreign Affairs, Defense, and Trade Division |
| Source Agency |
Congressional Research Service |
Summary:
What is a developing country? How does one know whether a country is actually developing
or not?
This report looks at this issue from several perspectives. Using a series of reports by various
organizations, it shows how countries rank in their levels of development according to different
criteria. Countries ranking high according to one measure may rank lower according to another.
It was once commonly believed that raising a country's average per capita income level would lead
to improvements in most other areas. Time and experience have shown, however, that social
conditions and the general well-being of people may not necessarily improve when a country's
average income level increases. Countries with relatively high levels of per capita income may rank
lower in their social and structural development. By contrast, some poor countries rank with the
advanced countries in their governance and levels of individual and economic freedom.
This report examines four criteria which are often used today to rank and assess countries'
levels of development. They are: (1) per capita income; (2) economic and social structure; (3) social
conditions; and (4) the prevailing level of economic and political freedom. Specific indices or
quantitative studies are explained and applied to each criteria and the differences among the various
measures are explained.
Jan Tinbergen, the Dutch economist and Nobel laureate (1969), argued that a separate tool or
instrument is needed to achieve individual economic objectives. Two goals cannot be achieved
effectively with the same policy tool. When applied to the field of development, the Tinbergen rule
suggests that one needs a separate program or procedure for each objective if one wants to achieve
multiple goals. There is little evidence, despite the claims of some authors, economic growth will
lead by itself to improvements in social indicators, economic freedom, governance, or political and
civil liberty. Likewise, though many argue that strong emphasis needs be placed on improving social
indicators and basic human needs, there is little evidence that improvements in these areas will lead
necessarily to increased economic growth or improved governance. According to Tinbergen's rule,
one likely needs a variety of programs, each targeting a particular objective, if one wants to
successfully pursue a variety of different goals.
Balancing the costs of achieving these various goals -- maintaining or increasing expenditures
for programs targeting social goals, conserving and improving infrastructure and capital facilities
and avoiding macroeconomic instability through prudent monetary, fiscal and foreign exchange
policies -- is one of the great challenges facing developing countries today.
Congress will consider major bills dealing with development issues in the coming year. Some
of the controversy on these issues comes from different views about U.S. interests and goals.
However, much of the debate about the goals and effectiveness of development aid stems from
different concepts about the development process itself. This report seeks to provide background
and information which may be of use to Congress in that context.
