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The consultancy for accelerating economic development World Economic Development 10 Key Messages FAQs Feedback Index to Major National Economies Grading system for development
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Grading system for economic development levels Index to Major National Economies The Child's guide to investment credit economics Economic discussion and arguments
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A Grading System for Economic Development LevelsIn order to discuss national development possibilities within a common framework, this web page proposes a classification scheme of economic development levels. The continuing page discusses the long-term effects of different growth rates within that framework. Table 1 sets out an eight-tier proposed classification system for the economic development levels of countries. In the Country Analysis sheets in the Index to Major National Economies, this classification of economies into these eight levels of development will be followed. Table 1 - economic development categories
Note: the "average" quoted in the above table is a geometric average Table 1 shows the ranges of incomes per head and the proposed development groups. All of the world's economies currently fall into one of the seven groups from Grade 1 to Grade 7. Pre-industrial societies were certainly in Grade zero - under $375 a head a year - but there are no records of such countries currently. It is likely that this is due to data collection problems - if a destitute nation is at war, the income per head in part or all of that country could be reduced to under $375 a year, but in these circumstances the collection of statistics is likely to be a low priority. Economies can exist at a level below that which I have classified as destitute, but the effects of industrialisation have now spread to all countries of the world. It may be helpful briefly to describe how economies currently fall into these groups. The Grade 1 economies have an income per head pa from $375 to $750 with a central figure of about $610 per head. Average spending power in these countries is equivalent in purchasing power to between one and two dollars per person a day. Such economies have been described as destitute and are at a very early level of economic development. Table 2 lists these economies. Examples of the countries in a Grade 1 band of development are Burundi, Tanzania, Eritrea, Ethiopia, The Democratic Republic of the Congo (previously Zaire) Somalia and Sierra Leone. These countries have the greatest potential for economic development if they adopted growth-accelerating systems. Their income per head is typically about one sixty-fourth of the level of a developed economy. (At the moment, the economies in Grade 7 have on average fifty times more in income per head than the Grade 1 economies.) In the year 2000 there were 179 million people living in these seven economies sharing a total income of under $110bn and an average income per head of $610 a year. The national income of these 179 million people was less than that of Israel, the 53rd largest world economy, where a similar income is shared between 5.9 million people.All of the Grade 1 economies, which comprise some 2.8% of the world's people, are in Africa. Table 2 - List of all Grade 1 economies with populations over 1m GDP per head: between $375 and $750
The Grade 2 economies have an income per head pa from $750 to $1,500 with an average figure of about $1,000 per head. That's between two to four dollars a day equivalent per person. These economies are described as impoverished and include such nations as Nigeria, the Sudan, and Kenya. In this band of economic development, industrialisation has not yet made much of an impact and an enormous potential exists for development. Their income per head could increase by a factor of 32 to reach the developed economy level.Table 3 below lists all grade 2 economies with a population exceeding one million people. The total income of the 478 million people in the Grade 2 economies is $483m, similar to the $476m GDP of Argentina, the 16th largest country in the world. Argentina has less than 38 million people. Table 3 - List of all Grade 2 economies with populations over 1m GDP per head: $750 to $1,500
There are 21 African nations and 9 Asian nations in this group. The 478 million people living in the 30 Grade 2 economies comprise 7.8% of mankind. The Grade 3 economies have an income per head pa from $1,500 to $3,000 with a central figure of about $2,150 per head, or between four and eight dollars a day per person. This band of 29 economies are very poor and the group contains 1.87 billion people, or about 30.5% of mankind. The Indian subcontinent - Bangladesh, India, and Pakistan - as well as Indonesia and much of South East Asia is in this group. But this group has countries from every continent - of these 29 countries, 11 are in Asia, 8 in Africa, 3 in the North American isthmus, 3 in South America and 3 in Eastern Europe. The economic potential for development at this level is merely massive, and the scale of their economies would increase by a factor of 16 as they achieved developed economy status.Table 4 - List of all Grade 3 economies with populations over 1m GDP per head: $1,500 to $3,000
The total GDP of these 29 countries is about 9.2% of GWP and at about 4 billion dollars is less than China's GDP of £4.5 trillion but greater than Japan's $3.15 trillion. The economy of India, at $2.2 trillion dollars, comprises over half the total and over half the population of this group. The Grade 4 economies have an income per head pa from $3,000 to $6,000 with a central figure of about $3,700 per head. At between eight and sixteen dollars purchasing power per person per day, this group are still poor and this income per head range includes the 28 economies listed in Table 5 Below.Table 5 - List of all Grade 4 economies with populations over 1m GDP per head: $3,000 to $6,000
This group of 28 economies produces some 14.5% of Gross World Product and comprises about 27.9% of mankind. These 28 countries with similar purchasing powers for their populations are from every continent: 8 are in Asia, 8 in Eastern Europe, 5 in Africa, 4 in South America and three in North America. Such economies could increase their current economic development level by an average factor of about eight. The Grade 5 economies have an income per head pa from $6,000 to $12,000 with a central figure of about $7,500 per head. This is equivalent to between sixteen and thirty-three dollars a day. I have called this group of economies “average” because the current average level of world development is about $7,200 a head.Table 6 - List of all Grade 5 economies with populations over 1m GDP per head: $6,000 to $12,000
These thirty one economies are producing 15.6% of Gross world product, and have 14.6 % of world population. These economies are at the logarithmic watershed between average development and development and could increase their current economic development level by an average factor of about four. Appropriate policies would accelerate that process. The Grade 6 economies have an income per head pa from $12,000 to $24,000 with a central figure of about $16,000 per head. This is between thirty-three to 66 dollars a day per person. These economies are not fully developed although that idea might come as a surprise to some of them. This group includes the 19 economies listed below. The European Union falls into this group although until that Union becomes more united in its political processes it cannot be regarded as one country yet, although from 1 January 2001 the central states of the Euro Zone will be one nation for all practical purposes.Table 7 - List of all Grade 6 economies with populations over 1m GDP per head: $12,000 to $24,000
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