Development is the process of growth, or changing from one condition to another. In economics, development is change from a traditional economy to one based on technology.

A traditional economy usually centers on individual survival. Families and small communities often make their own food, clothing, housing, and household goods. The economies of developing countries, which have largely traditional economies, often rely on agriculture. Developing countries also rely on raw materials, which can be traded to developed countries for finished goods. These raw materials include oil, coal, and timber.

Developed countries, which have modern economies, are more diverse. Their economies rely on many different people and organizations performing specialized tasks. Agriculture and raw materials represent only part of the economy of a developed country. Other sectors include manufacturing, banking and finance, and services such as hairdressing or plumbing. This vast economy results in a great variety of goods and services.

There is no single test to determine what is a developing country. One way to rate a country’s level of development is by the total value of goods and services the country produces, divided by the number of people in the country. This is called the gross national income (GNI) per capita.

Developed nations have much higher GNI per capita. For example, Luxembourg has a GNI per capita of $69,390. The United States has a GNI per capita of about $48,000. Singapore has a GNI per capita of $34,760.

Signs of a high level of development include industrialization and the everyday use of advanced technology.

Levels of education are also related to development. Developed countries usually have higher literacy rates, meaning most of their population can read and write.

Measuring Development

Developed countries have a high life expectancy, or the average number of years a person can expect to live. Japan, a highly developed nation, has the highest life expectancy of any country, at 82.7 years.

The age structure in developed countries usually has its largest population group between 15 and 64 years old. Countries whose age structure is very young (a large population under 15 years old) may have to spend more on education. People under the age of 14 typically cannot maintain steady, full-time work to support the economy. Half of the population (50 percent) of the developing country of Uganda is under the age of 14, with only 48 percent between the working ages of 15 and 64.

The unemployment rate can also be an indicator of the level of economic development. In developed countries, most adults usually work. The unemployment rate, or able adults who cannot find work, is often below ten percent. In developing countries, such as Zimbabwe, the unemployment rate can be as high as 95 percent.

Developed countries usually have a large middle class. Middle-class incomes fall between poverty and great wealth. Some developing countries have large populations living in poverty. In Haiti, 59 percent of the people live in poverty.

As countries begin to develop, their agricultural output usually increases. Improved technology allows fewer farmers to harvest more food. This raises the income of people in rural areas, as well as allowing more people to work in jobs outside agriculture.

Another sign of development is a growth in exports, or products grown or made in one country that are sent to another country for sale or use. A country can export raw materials, such as oil or corn. A country can also export finished goods, such as computer software.

The amount of electricity used by a country can also indicate its level of development. Electricity is used in homes, schools, and businesses. Factories use huge amounts of electricity. Electrification, especially in rural areas, is an important process for a developing economy.

Electrification is often expensive. The high cost of oil, natural gas, and coal may slow the electrification process. Constructing facilities that run on hydroelectricity or nuclear energy often requires technology and money that developing countries do not have. Some developing countries, such as Bangladesh, are trying to use renewable energy, such as solar or wind, to bring electricity to their rural population.

Countries that are switching from agricultural to industrial economies, and are experiencing rapid economic growth are sometimes called newly industrialized countries. They usually have lower poverty rates than less developed nations, but they have not yet reached the income and education levels of developed countries. Newly industrialized countries include India, Brazil, and Thailand.