Classification on the Basis of Level of Development

In under-developed or developing economies, the rate of population growth is very high. This is because of the high birth rate as a result of mass poverty, illiteracy, and religious orthodoxy.

On the basis of per capita income of 2011 in the World Development Report of World bank in 2013, has categorsied some countries as low-income countries whose per capita income was $1025 or less. Low-income countries and middle-income countries taken together are described as underdeveloped economies or developing economies.

Per capita income is the income per person in the population. In underdeveloped and developing economies, low per capita income leads to poverty. The use of outdated technology is one of the reasons for low per capita income.

The economies are divided into the capitalist and socialist and mixed economy on the basis of Ownership.

Some economies developed at a high rate and emerged as developed nations, for instance; the USA, Sweden, Germany, Canada, etc., while, some economies developed at a low rate and remained less developed nations or developing nations. For instance; Bhutan, Bangladesh, Pakistan, Kenya, etc.