Country’s stage of economic development

Alternatively the United Nations classifies a country’s stage of economic development based on its level of industrialization. It groups into three categories:

MDCs (more developed countries) Industrialized cities with higher per capita incomes, such as Canada, England, France, Germany, Japan, and the United States.

LDCs (less developed countries): Industrially developing countries just entering World trade, many of which are in Asia and Latin America with relatively low per capita incomes.

LLDCs (least developed countries): Industrially underdeveloped agrarian subsistence societies with rural population extremely low per capita income levels and little world trade involvement. LLDCs are found in Central Africa and parts of Asia. Violence and the potential are often associated with LLDCs.

The UN classification has been criticized because it no longer seems relevant in the rapidly industrializing world today. In addition many countries that are classified as LDCs are industrializing at a very rapid rate, whereas others are advancing at more traditional rates of economic development. It is interesting to note in the differences in consumer spending among the Latin American countries and the United States.

Countries that are experiencing rapid economic expansion and industrialization and do not exactly fit as LDCs or MDCs are more typically referred to as newly industrialized countries (NICs). These countries have shown rapid industrialization of targeted industries and have per capita incomes that exceed other developing countries. They have moved away from restrictive trade practices and instituted significant free market reforms, as a result they attract both trade and foreign direct investment. Chile, Brazil, Mexico, South Korea, Singapore and Taiwan are some of the countries that fit this description. NICs have become formidable exporters of many products, including steel, automobiles machine tools, clothing and electronics as well as vast markets for imported products.

Brazil provides an example of the growing importance of NICs in world trade, exporting everything from alcohol to carbon steel. Brazilian orange juice, poultry, soybeans, and weapons (Brazil is the world’s sixth largest weapons exporter) compete with US products for foreign markets. Embraer, a Brazilian aircraft manufacturer has sold planes to over 60 countries and provides substantial portion of the commuter aircraft used in the United States and elsewhere. Even in automobile production, Brazil is World player; it ships more than 200,000 cars, trucks and uses to Third World countries annually. Volkswagen has produced more than 3 million V W Beetles in Brazil and has invested more than $500 million in a project to produce the Golf and Passat automobiles. The firm also recently announced a deal to sell $500 million worth of auto parts to a Chinese partner. General Motors has invested $600 million to create hat it calls an industrial complex – a collection of 17 plants occupied by suppliers such as Delphi, Lear, and Goodyear to deliver preassembled modules to GM’s line workers. All in all, auto and auto maskers are investing more than $2.8 billion aimed at the 200 million people in the Mercosur market the free trade group formed by Argentina, Brazil Paraguay and Uruguay.

Among the NICs South Korea, Taiwan, Hong Kong and Singapore have had such rapid growth and export performance that they are known as the Four Tigers of Southeast Asia. The Four Tigers have almost joined the ranks of developed economies in terms of GDP per head. These countries have managed to dramatically improve their living standards by deregulating their domestic economies and opening up to global markets. Rom typical Third World poverty, each has achieved a standard of living equivalent to that of industrialized nations, to per capita incomes in Hong Kong and Singapore rivaling those of the wealthiest Western nations.

These four countries began their industrialization as assemblers of products for US and Japanese companies. They are now major world competitors in their own right. Korea exports such high tech gods as petrochemicals, electronics, machinery and steel all of which are in direct competition with Japanese and US made products. In consumer products, Hyundai, Kia, Samsung and Lucky Goldstar are among the familiar Korean made brand names in automobiles microwaves and televisions sold in United States.