Trading Characteristics of Highly Developed, Emerging and Less Developed Economies

A wide development spectrum exists globally. Three important categories of countries can be identified, each of which has different trading characteristics.

Developed economies/ countries

Development characteristics

Around 80 countries are classified by the World Bank as having high average incomes (GNI per capita) of US$12,736 or above (2015 values). Life expectancy is typically in the 75-85 years range and Human Development Index (HDI) scores for these states are high.

Trading characteristics

Office work has overtaken factory employment. Almost four-fifths of the UK’s GDP is derived from trade is services. However, trade in “hi-tech” manufacturing (as opposed to mass production of basic items) remains important for some countries, notably German

Emerging economies/ countries (EEs)

Development characteristics

EEs correspond with the World Bank’s ‘middle-income’ group of countries. The number of EEs has increased rapidly in recent decades: this is linked with the spread of globalisation. Their transport infrastructure is improving rapidly and they are attracting investment from the world’s transnational corporations. 80 countries belong loosely to this category. EEs are home to a growing “middle class” of consumers who earn US$10 a day of more and who may expect to live to the age of 65-75. The BRIC and MINT group members are classified as EEs (see below).

Trading characteristics

These countries have begun to experience high rates of economic growth, often due to rapid factory expansion and industrialisation. As a result, their share of world trade has grown enormously in recent decades. There is great variation, however, in their goods and services specialisations. China and Bangladesh are “workshops of the world” (specialising in manufacturing). India and the Philippines are important global hubs for call centre services. Thailand and Indonesia play an important role in both agricultural and manufacturing trade.

Less Developed economies/ countries (LDCs)

Development characteristics

This group of around 30 countries is classified by the World Bank as having low average incomes (GNI per capita) of US$1,045 or below (2015 values). Life expectancy is still low (50-60 yrs.) in some sub-Saharan countries. Several LDCs suffer severely from conflict and weak governance. These so-called “failed states” deter FDI and are essentially “switched off” to many global flows. Many are in Africa.

Trading characteristics

Agricultural and raw material trade still plays a very important role in the economy of many LDCs. However, food prices fluctuate from year to year due to climatic factors and market forces. This has promoted some countries to try to diversify their trade. Rwanda has attempted to develop its own tourist industry by encouraging wealthy safari tourists to see its mountain gorillas.