Development is the process of growing and changing. In economics, development means changing from a traditional economy to an economy based on newer technologies.

A traditional economy is usually about survival. Families and small communities often make their own food, clothing, homes and household goods. An example of a traditional economy is the Inuit people in the United States' Alaska and Canada.

Yet, most traditional economies don't exist in rich, "developed" countries. Instead, they exist inside of poorer, "developing" countries. For example, the Maasai practice a traditional economy inside of the country of Kenya. However, Kenya's overall economy is a mixture of traditional and modern.

Developing countries often are based on agriculture, or rely on selling raw materials. These raw materials include oil, coal, iron, rubber, and timber. These raw materials can be sold to developed countries. Developed countries will then sell "finished goods" back to developing countries. These are goods made with the raw materials, like timber or coal.

Developed countries have modern economies. A modern economy has many different people and groups performing different tasks. Agriculture and raw materials are only part of the economy. Modern economies also include manufacturing and the so-called "service" sector. The service sector includes anything that isn't a physical good, including retail, banks, hotels, real estate, education, health, social work, computer services, recreation, media, and communications. It even includes electricity, gas, and water supply. The modern economy is large and produces a great variety of goods and services.

Signs of a Developing Economy

There are different ways of determining what is a developing economy. One way is the gross national income (GNI) per person. To measure the GNI, first add up the total value of its goods and services in a country. Then divide that by the number of its people.

Developed nations have a much higher GNI per person. For example, Luxembourg has a GNI per capita of $69,390. The United States has a GNI per capita of about $48,000, and Singapore has a GNI per person of $34,760.

There are other signs, as well. Highly developed countries have high levels of industrialization. Another sign is that people use advanced technology in their everyday lives.

Developed countries usually have higher literacy rates. That means most of a population can read and write.

Japan Has the Highest Life Expectancy

People in developed countries have a high life expectancy. That is the average number of years a person can expect to live. Japan is a highly developed nation and has the highest life expectancy of any country. The average Japanese citizen lives to 82.7 years, according to a World Health Organization study in 2017.

In developed countries, the largest population group is usually between 15 and 64 years old. Half of the population of the developing country of Uganda is under the age of 14. Only 48 percent is between 15 and 64.

In developed countries, most adults work. The unemployment rate is the number of adults who are out of work. In developed countries, the unemployment rate is often below 10 percent. In a developing country the unemployment rate can be much higher.

Developed countries usually have a large middle class. Middle-class incomes fall between poverty and great wealth. Some developing countries have large populations living in poverty. Haiti is a developing country, and 59 percent of the people live in poverty.

As countries begin to develop, they make more agricultural products. If they have access to better technology, farmers can harvest more food using fewer workers. Then, people in rural areas earn more and more people can work in jobs besides agriculture.

Electricity Is a Sign of Development

Another sign of development is growth in exports. Exports are products grown or made in one country. They are sent, or exported, to another country for sale or use. A country can export raw materials, such as oil or corn. Finished goods, such as computers, can also be an export.

The amount of electricity can also show a country's level of development. Electricity is used in homes, schools and businesses. Factories use huge amounts of electricity. Putting in electricity, especially in the countryside, is an important process for a developing economy.

Oil, natural gas, and coal are raw materials that are used to produce electricity. They can be expensive, and they can run out. Some developing countries, such as Bangladesh, are trying to use renewable energy. These sources of energy, such as solar or wind, can't be used up.

Newly industrialized countries are countries that are switching from agricultural to industrial economies. Their economies grow quickly. Newly industrialized countries are not as poor as developing nations. However, they are not as wealthy or educated as developed countries. Newly industrialized countries include India, Brazil, and Thailand.