WB is eliminating the term ‘developing countries’ from its vocabulary

Change is often inevitable in society as it reflects the fact of life. It also applies in the perception regarding certain things that are worth changing. For example, scientists hold evolution to be a central unifying principle of biology, with sufficient evidence that evolution is a scientific fact.

It is generally noted that economic development is an evolutionary process with technological learning at its heart. Because right at the basis of economic theorisation, modern economic systems contain a rich mix of institutions, not simply the firms, households and markets that are in neoclassical theory, and that the roles of government cannot be adequately understood as simply responses to market failures. It develops a view that long-run economic change must be understood as involving the co-evolution of technologies in use and the institutional structures supporting and regulating these.

It is against this perception that most recently the World Bank is changing the use of the terms ‘developing and developed countries’ to the ‘low and middle-income countries’ and ‘upper middle-income economies’, respectively. The former refers to countries with small or middle income level. Also, defined as lower middle-income economies—those with a GNI per capita between $1,006 and $3,955 and the latter refers to those countries those with a GNI per capita between $3,956 and $12,235 (2018).

An interesting question is: Are the terms ‘developed and developing countries’ still relevant? As a result of the new technology, the world becomes a small town. The World Bank, which has the mandate to lend money to developing nations with the goal of reducing poverty and improving standards of living is eliminating the term ‘developing country’ from its data vocabulary. Originally, developing countries was used loosely to refer to the process of changing toward economic growth, that is, an increase in production, per capita consumption, and income. The process of economic growth involves better utilisation of natural and human resources, which results in a change in the social, political, and economic structures.

Today, the World Bank is no longer distinguishing between ‘developed’ countries and ‘developing’ ones in the presentation of its data. The change marks an evolution in thinking about the geographic distribution of poverty and prosperity. But it sounds less radical when you consider that nobody has ever agreed on a definition for these terms in the first place.

While middle income countries are home to five of the world’s seven billion people and 73 per cent of the world’s poor people, and the same time, represent about one third of global GDP and are major engines of global growth, so it would sound illogical to see them in the same old-fashioned lens.

At some point, the World Bank would use expressions such as Least Developed Countries and Less Developed Countries while in academia and media, developed or developing countries have been used for long, although in the beginning other expressions were there (e.g. underdeveloped countries, backward countries, primitive countries, the South, Third World, etc.).

In contemporary world, it no longer makes sense to use expressions that distinguish between countries according to their level of development that can be questioned for many reasons, but surely not for the reason assuming that all countries are equal now, which often is meant when one refers to ‘the global village’ or a ‘small town’. The World Bank had previously simply lumped countries in the bottom two-thirds of gross national income (GNI) into the category, but even that comparatively strict cut-off wasn’t very useful.

The main issue was that there was just so much heterogeneity between Mexico and Somalia for both to be classified in the same group, yet these two countries strikingly differ in terms of economic growth and development.

The International Monetary Fund (IMF) divides the world into two major groups, advanced economies as well as emerging and developing economies. Its classification is not based on strict criteria, economic or otherwise, but instead has evolved over time with the objective of facilitating analysis by providing a reasonably meaningful organisation of the data. However, some countries miss out the classification precisely because they aren’t monitored due to political reasons and therefore not included in the analysis, namely Anguilla, Cuba, the Democratic People’s Republic of Korea and Somalia.

Unlike the United Nations, which does have a formal definition of “developed countries” versus “developing countries”, instead insisting that its classifications in UN methodology are “for statistical convenience and does not express a judgement about the stage reached by a particular country or area in the development process”. 

However, these categories are widely used in the UN system, including in the UN’s 2017 Sustainable Development Goals Report as well as in the datasets used for the 2018 SDG16 Data Initiative Global Report. If the distinction between “developing country” and “developed country” is operationally meaningless for formulating and evaluating development programming, international lawyers and scholars should take note of the imprecision of this category when putting forward their observations and assessments of the state of rule of law, economic development, and poverty.

The writer is a Legal Expert.

The views expressed in this article are of the author.

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