Advanced economies are developed countries that, according to the International Monetary Fund (IMF), have a GDP per capita (nominal) of more than 20,000 USD. Or, in the case of GDP per capita PPP (purchasing power parity), a GDP per capita PPP greater than 22,000 USD.
Advanced economies, therefore, are those countries that, in relation to their per capita GDP indicators, present a GDP level of over $ 20,000, and over $ 22,000 if we take purchasing power parity into account.
This category is granted by the International Monetary Fund (IMF), although there are other organizations, such as the World Bank or the UN that, through other indicators, also grant this status to countries, although under another name.
The World Bank defines these advanced economies as "developed countries". To grant the status, the body relies on the income received by the citizenry. For its part, the United Nations (UN) attends to a synthetic indicator, the Human Development Index (HDI). This indicator takes into account aspects such as wealth, education and health. Thus, this status is granted to those countries that, according to the multilateral organization, have a good "quality of life."
In short, we are talking about economies, industrialized or not, that have a high standard of living, that is, a quality of life higher than that of developing economies. In this sense, a standard of living that leads him to register that income, that human development, as well as that outstanding per capita.
Characteristics of advanced economies
As a summary, let's look at the main characteristics that define advanced economies:
- It is a status granted by the International Monetary Fund (IMF) to countries with a GDP level greater than $ 20,000, and greater than $ 22,000 if we take into account purchasing power parity.
- These economies generally have a good 'quality of life'.
- The World Bank defines them as "developed countries".
- The income received by the average citizen in the country is used.
- The UN, for its part, establishes the Human Development Indicator (HDI) to grant said status.
- The opposite of advanced economy status, for these organizations, are emerging economies and developing countries.
- An example of an advanced economy is the United States. From emerging, China.
Difference between advanced (developed) and emerging (developing) economies
Given the characteristics of these advanced economies, let us see the differences that these economies present compared to emerging economies:
Advanced economies or developed countries, as we said, are developed countries that, according to the International Monetary Fund (IMF), have a GDP per capita (nominal) of more than 20,000 USD. Or, in the case of GDP per capita PPP (purchasing power parity), a GDP per capita PPP greater than 22,000 USD.
On the other hand, emerging economies, or developing countries, are countries that are in a transition phase between developing and developed countries. To be considered emerging, they must be growing at a good rate and not be third world countries, but they are not developed countries either, it should be noted. The term emerging markets was popularized by Antoine van Agtmael in the 1980s. At that time, this economist chaired the World Bank and used the term to refer to some countries such as China, India, Brazil or Argentina.
Among other characteristics, some of the main features of these emerging economies are the following:
- Internationalization and opening to the outside.
- Political instability.
- Very volatile national currency.
- Absence of middle classes and marked inequality.
- Great growth potential and abundance of resources.
- Promotion of large-scale social changes.
As an example, some of the most important emerging economies are the following:
Difference between advanced (developed) economies and underdeveloped economies
As in the previous point, it is worth highlighting the differences between advanced economies and underdeveloped countries.
As we have already seen what an advanced economy is at the beginning and in the previous point, let's go directly to see what an underdeveloped economy or an underdeveloped country is.
An underdeveloped country, or underdeveloped economy, is one that has a low level of gross domestic product (GDP) per capita and presents structural impediments to its sustained economic growth. Thus, it shows, for example, high levels of inequality and corruption.
In other words, underdeveloped countries not only have low incomes, but also face social, cultural and political problems that slow down their expansion. In this way, being able to differentiate them from emerging markets, which do achieve high growth and openness rates.
The United Nations (UN) uses the term Least Developed Countries or LCDs. This, for its acronym in English (Least Developed Countries).
As an example, underdeveloped countries are mainly in Africa. To get an idea, among the 25 nations with the lowest indicators, the only one that is not on that continent is Haiti.
Examples of advanced economies
To finish, let's look at some more examples of what advanced economies are.
Considering their GDP per capita, they are advanced economies:
- United Kingdom.
As well as many other economies that, according to the IMF, receive this status.