As a country develops, the nature of its internal structure, finances and population changes. While several gauges are available to measure these changes, the most common indicators of economic development are Gross Domestic Product (GDP) per capita, the poverty level, life expectancy, the proportion of workers in agriculture and changes in the physical quality of life.
GDP Measures Economic Output
The gross domestic product is the economic value of a country's output of goods and services and indicates the strength of its economy. A higher GDP per capita is a sign of a more sophisticated stage of economic development.
According to data from the Central Intelligence Agency, the nations with the highest GDP per capita are Liechtenstein, Qatar, Monaco, Macau and Luxembourg. The countries with the lowest GDP per capita are Malawi, Niger, Mozambique, Tokelau, Democratic Republic of the Congo, Burundi and the Central African Republic.
Poverty Level Per Capita GDP
As a country's GDP per capita grows, the poverty rate declines. People earn more money, become more prosperous and begin to accumulate wealth.
Poverty rates for countries with low GDP per capita also have a higher proportion of people living in poverty. For example, according to figures from the Central Intelligence Agency, the Democratic Republic of the Congo has 63 percent of its population living in poverty. Yemen, South Sudan and Mozambique all have close to 50 percent of their people living below the poverty line. These figures are in stark contrast to a high GDP country like Switzerland, which has only 6.6 percent of its population living below the poverty line.
Higher Incomes and Life Expectancy
As a country develops, its people move out of poverty, and their life expectancy increases. They earn more money and can afford better medical care.
At the top of the list is Monaco, with a life expectancy of 89 years. Residents of Japan and Singapore can expect to live an average of 85 years. Liechtenstein, Norway, Sweden and Switzerland have life expectancies above 82 years.
Poorer countries with lower GDPs and higher poverty rates, such as Chad, Zambia, Somalia, Central African Republic and Mozambique have life expectancies barely above 50 years.
Levels of Economic Development
Countries that have most of their population employed in agriculture are considered less developed. Countries with more urban areas and cities are considered better developed. Consequently, one of the indicators of economic growth is the percentage of people employed in agriculture. For example, only 1.3 percent of the population in the United Kingdom is employed in agriculture, while Zambia has 85 percent of its people working on farms.
The Human Development Index
The Human Development Index (HDI) is a composite metric created by the United Nations Development Programme to measure the levels of economic development of a country in three areas: education, health and per capita income.
As examples, countries with the highest HDI are Norway, Australia, Switzerland, Denmark and the Netherlands. The countries with the lowest HDI are Niger, Eritrea, Gambia, Ethiopia and Afghanistan.
- The World Bank: World Development Indicators
- United Nations Development Programme: Development Indicators
- Economics Discussion: 4 Key Indicators of Economic Development
- India Today: List of Eight Poorest Countries in the World
- Central Intelligence Agency: Life Expectancy at Birth
- Projected GDP per capita Ranking (2018-2023)
- Central Intelligence Agency: Country Comparisons of GDP per Capita
James Woodruff has been a management consultant to more than 1,000 small businesses. As a senior management consultant and owner, he used his technical expertise to conduct an analysis of a company's operational, financial and business management issues. James has been writing business and finance related topics for National Funding, bizfluent.com, FastCapital360, Kapitus, Smallbusiness.chron.com and e-commerce websites since 2007. He graduated from Georgia Tech with a Bachelor of Mechanical Engineering and received an MBA from Columbia University.