Differences between EDCs and LIDCs

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Differences between EDCs and LIDCs

This article aims to examine the key differences between EDCs and LIDCs. EDCs refer to emerging developing countries, while LIDCs refer to low-income developing countries. It goes without saying that countries in the world are now-a-days divided into three broad groups i.e. EDCs, LIDCs, and ACs (advanced countries), based on the economic and socio-cultural development they brought about over the years. This classification by the International Monetary Fund (IMF) is different from Brandt line, which divided the world as the rich north and the poor south (BBC, 2020).

Emerging developing countries (EDCs)

Emerging developing countries (EDCs) are those that are in the process of getting richer and typically shifting towards mixed or free market economies. These countries have brought about a lot of infrastructure development and institutionalised regulatory bodies. The GNI per capita in EDCs is more than that in LIDCs; however lower than $12,746 which is the typical GNI per capita in ACs (BBC, 2020).

Examples of EDCs

Brazil, Russia, India, China, South Africa, Mexico, Indonesia, Turkey, Nigeria, Malaysia, Bangladesh, Albania, Croatia, Hungary, Romania, Bosnia and Herzegovina, Bulgaria, Argentina, and Egypt are some of the emerging and developing countries in the world.  According to MSCI Emerging Markets Index (cited in Sraders, 2020) twenty four developing countries i.e. Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and United Arab Emirates are considered ‘emerging markets’.

Low income developing countries (LIDCs)

According to IMF (2018) the term ‘LIDC’ refers to countries with low per capita Gross National Income (GNI) and comparatively weak socioeconomic indicators. There are 59 countries in this category. These countries together have one fifth of world’s population (Around 1.5 billion); however, they contribute just 4% to the global economic output. The GNI per capita in LIDCs is less than $2700.

Poverty is a vicious problem in LIDCs. In some of the LIDCs, the extreme poverty rate is between 70 per cent and 80 per cent (The United Nations, 2019). Due to extreme poverty, many people in those countries suffer from poor nutrition and health. They also lack in education which heavily impacts on their productivity, which in turn affect the overall economy of those countries.

Examples of LIDCs

Zimbabwe, Honduras, Papua New Guinea, Solomon Islands, Mauritania, Tajikistan, Mozambique, Madagascar, Nicaragua, Lesotho, Cameroon, Sudan, Somalia, Nepal, Chad, and Central African Republic are some of the names in the list of LIDCs published by IMF in 2018.

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Last update: 15 February 2020

References

BBC (2020) Why some countries are richer than others, available at: https://www.bbc.co.uk/bitesize/guides/zxw2cwx/revision/1 (accessed 11 February 2020)

IMF (2018) Macroeconomic Developments and Prospects in Low-Income Developing Countries, available at: https://www.imf.org/en/Publications/Policy-Papers/Issues/2018/03/22/pp021518macroeconomic-developments-and-prospects-in-lidcs (accessed 14 February 2020)

Sraders, A. (2020) What Are Emerging Markets? Characteristics and List, available at: https://www.thestreet.com/markets/emerging-markets/what-are-emerging-markets-14819803 (accessed 14 February 2020)

The United Nations (2019) Poverty Trap Leaves Least Developed Countries Ever Further Behind, available at: https://unctad.org/en/pages/PressRelease.aspx?OriginalVersionID=382 (accessed 10 February 2020)

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Author: Joe David

Joe David has years of experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality and tourism management.