Economic Development

In the global context, economic development refers to processes of economic and social change that occur in a set of countries classified as “developing countries.” Most often, the term connotes some sense of progress whereby the material living standards of the inhabitants of the world's poorer countries improve to more closely resemble those in wealthier countries. This entry first discusses how the outcomes of economic development have been defined and measured and then provides an overview of various theories on how the process of economic development has been thought to occur. Finally, this entry presents a brief overview of the empirical realities of economic development in the world.

It is important to note that there is no universally accepted definition of what constitutes a developing country, beyond the fact that developing countries tend to be low income. Typically, the term developing country is used to encompass the majority of South and East Asia (excluding the wealthier countries such as Japan and South Korea); the poorer nations of North Africa, the Middle East, the Caribbean, and Central and South America; and nearly all of sub-Saharan Africa. The classification sometimes also includes the former Soviet countries of eastern Europe and central Asia, as well as some of the wealthier Latin American countries.

The term economic development can be used to indicate an outcome that is desired or has occurred, as well as a process of achieving those outcomes. In the sense of outcomes, economic development is conceived of as end results that indicate the extent to which “development” has occurred. Thus, in this sense, economic development refers to the progress that has been made in a particular case toward a defined set of goals, such as higher incomes, improved living conditions, or greater economic opportunity. In the sense of a process, economic development is conceived in terms of how the developing countries might achieve “development.” The study of economic development in this sense thus consists of theorizing or evaluating theories of social and economic transformation that will lead to long-term economic progress.