EconomicsICSE Class 9 · Types of Economies

Developed and Developing Economies, Economic Growth and Economic Development (ICSE Class 9)

Updated 18 October 2026 · Fact-checked

A developed economy has high per capita income, advanced technology and a high standard of living; a developing economy has low or middle per capita income and still faces poverty and unemployment. Per capita income is national income divided by population. Economic growth is a sustained rise in real national or per capita income; economic development is growth together with better living standards, so growth is necessary but not sufficient for development.

Growth is only the rising income part; development also needs better literacy, health and jobs, so growth alone is not enough.

Illustration drawn for QuestionBuddy.

Understand Developed and Developing Economies, Economic Growth and Economic Development

Developed and developing economies.

A developed economy has a high level of per capita income, advanced technology and a high standard of living (for example the USA, the UK, Germany and Japan).
A developing economy has a low or middle level of per capita income and is raising its output and living standards, but still faces poverty and unemployment (for example India, Bangladesh and Kenya).

Differences: per capita income; structure of the economy (in developed economies most workers are in industry and services, in developing ones a large share depends on agriculture); technology (advanced and capital-intensive versus older and labour-intensive in many sectors); infrastructure (well developed versus inadequate); human development (high literacy and life expectancy versus lower); population growth (low versus relatively high); poverty and unemployment (low versus widespread).

Per capita income. Per capita income = National income / Population. A country with a large total income can have a low per capita income if its population is large. Real income means income adjusted for price changes, so that only an increase in output is counted.

Economic growth. A sustained increase in the real national income (real output) or real per capita income of a country over time. It is quantitative and is measured, for example, as the percentage rise in real GDP. Percentage growth = (New value - Old value) / Old value x 100.

Economic development. Economic growth together with qualitative and structural changes that raise the standard of living: less poverty and unemployment, better education and health, more equal distribution of income, better infrastructure, and a shift of workers from agriculture to industry and services.

Differences between growth and development. Nature: quantitative versus quantitative and qualitative. Scope: narrow (output only) versus wide (output plus welfare). Measurement: rise in real GDP or per capita income versus indicators such as literacy, life expectancy, poverty and the Human Development Index. Relationship: growth is necessary for development but not sufficient; growth can occur without development if the gains go to a few or are eaten up by population growth.

Neighbouring topics: capitalist, socialist and mixed economies are on the previous page of this chapter.

Developed and Developing Economies, Economic Growth and Economic Development: key facts

Per capita income: National income / Population | in rupees per person; Same year for both.
Growth rate: (New value - Old value) / Old value x 100 | use real income; Percentage.
Growth versus development: Growth: rise in real output, quantitative | development: growth plus better living standards; Growth is necessary, not sufficient.

Developed and Developing Economies, Economic Growth and Economic Development in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Growth that does not reach everyone

Suppose a small country's real income rises by 6 per cent in a year, but its population also rises by 6 per cent.

What happens to income per person and what does this show?

Try it first, then show the solutionSolution

If both rise by the same percentage, income per person stays the same.
So an average person is no better off.
This is growth without development.

Answer: Per capita income does not change, so living standards do not improve: growth without development.

Memory hook: Output up, but per head the same.

Tricks to remember Developed and Developing Economies, Economic Growth and Economic Development

Short memory aids. Say each one aloud once, then use it on a question the same day.

Per capita means per head
Divide national income by the number of people.
Use it when: Per capita questions.
Growth is a number, development is a life
Growth measures output; development measures better living.
Use it when: Growth versus development.
Necessary, not sufficient
Growth is needed for development but does not guarantee it.
Use it when: Relationship.

Developed and Developing Economies, Economic Growth and Economic Development: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Population from per capita income · 3 marks · Short answerHarder board level

Country P has a national income of Rs 90,000 crore and a per capita income of Rs 30,000. Find its population. If a Country Q has the same national income but a population of 9 crore, compare the two per capita incomes.

Try it first, then show the solutionSolution

Population = National income / Per capita income = 90,000 crore / 30,000 = 3 crore. (1 mark)
Q: per capita income = 90,000 crore / 9 crore = Rs 10,000. (1 mark)
P has three times the per capita income of Q although the national incomes are equal; a larger population lowers the average. (1 mark)

Answer: 3 crore; Q has Rs 10,000 per head against Rs 30,000 of P.

Example 2: Meaning of growth · 1 mark · MCQBoard level

Economic growth means:
(a) a rise in prices (b) a sustained rise in real national income (c) a fall in poverty only (d) a rise in population

Try it first, then show the solutionSolution

Growth is a sustained rise in real national or per capita income.

Answer: (b) a sustained rise in real national income

Example 3: Growth rate · 3 marks · Short answerHarder board level

Real national income of an economy rose from Rs 2,00,000 crore to Rs 2,12,000 crore in a year. Find the growth rate.

Try it first, then show the solutionSolution

Growth = (New - Old) / Old x 100. (1 mark)
Increase = 2,12,000 - 2,00,000 = Rs 12,000 crore. (1 mark)
12,000 / 2,00,000 x 100 = 6 per cent. (1 mark)

Answer: 6 per cent

Example 4: Case study: growth without development · 4 marks · Case-basedHOTS / competency

The economy in the previous example had a population of 40 crore at the start and 42.4 crore at the end of the year.
(i) Find per capita income at the start. (1)
(ii) Find per capita income at the end. (1)
(iii) Has the average person gained? Explain. (2)

Try it first, then show the solutionSolution

(i) 2,00,000 crore / 40 crore = Rs 5,000.
(ii) 2,12,000 crore / 42.4 crore = Rs 5,000.
(iii) No. Per capita income is unchanged because population grew by the same 6 per cent as output, so there was growth but not an improvement in living standards, that is, growth without development.

Answer: (i) Rs 5,000 (ii) Rs 5,000 (iii) no gain per head; growth without development

Example 5: Developed or developing · 3 marks · Short answerHarder board level

A country has low per capita income, most workers in farming, older technology in many sectors, inadequate roads and power, and widespread poverty. Name its type and give four features that justify it.

Try it first, then show the solutionSolution

It is a developing economy. (1 mark)
Features: low per capita income and a large share of workers in agriculture. (1 mark)
Older technology, inadequate infrastructure and widespread poverty and unemployment. (1 mark)

Answer: A developing economy, because of low per capita income, dependence on agriculture, older technology, poor infrastructure and poverty.

Where students lose marks in Developed and Developing Economies, Economic Growth and Economic Development

The slips examiners see most often, and what to write instead.

Mistake: Dividing in the wrong order
Population is divided by national income.
Wrong working
Rs 3 crore / Rs 90,000 crore
Right working
Rs 90,000 crore / 3 crore = Rs 30,000
Do this: National income comes first.
Usually costs: 2 marks
Mistake: Using the new value as the base
Growth is calculated on the wrong denominator.
Wrong working
12,000 / 2,12,000 x 100
Right working
12,000 / 2,00,000 x 100 = 6 per cent
Do this: Divide by the old value.
Usually costs: 1 mark
Mistake: Treating growth and development as the same
Both involve a rise.
Wrong working
Growth means better life
Right working
Growth is a rise in output; development includes better living standards
Do this: Keep the two separate.
Usually costs: 1 mark

Exam tips

Write the formula before each numerical.
In differences, give matching points for both types of economy.
Use real income when you speak about growth.
Give a short example whenever you say growth without development.

Practice questions on Developed and Developing Economies, Economic Growth and Economic Development

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
Per capita income is calculated as:
(a) national income x population (b) national income / population (c) population / national income (d) saving / income
Hint
Per head.
Answer
(b) national income / population
Q2 · 2 marks · Very short answerBoard level
Give two differences between a developed and a developing economy.
Hint
Income and structure.
Answer
Per capita income is high in a developed economy and low or middle in a developing one; most workers are in industry and services in a developed economy but a large share depends on agriculture in a developing one.
Q3 · 3 marks · Short answerHarder board level
National income is Rs 36,000 crore and population 6 crore. Find per capita income. If the population doubles and national income stays the same, what is the new per capita income?
Hint
Divide again with the new population.
Answer
36,000 / 6 = Rs 6,000. New population 12 crore, so 36,000 / 12 = Rs 3,000; it is halved.
Q4 · 3 marks · Short answerHarder board level
Real income of a country was Rs 5,000 crore last year and Rs 5,300 crore this year. Find the percentage growth.
Hint
Divide the increase by the old value.
Answer
Increase = 300; 300 / 5,000 x 100 = 6 per cent.
Q5 · 3 marks · Short answerHOTS / competency
"Growth is necessary for development but not sufficient." Explain with an example.
Hint
What if the gains go to a few?
Answer
Without growth there is not enough output to raise health, education and incomes, so growth is necessary. But if the rise in output goes to a few people or is absorbed by population growth, poverty and living standards do not improve, so growth alone is not sufficient.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.Formula of per capita income?Show answer
National income / Population
2.Give one developed economy named in the chapter page.Show answer
The USA, the UK, Germany or Japan.
3.Give one developing economy named in the chapter page.Show answer
India, Bangladesh or Kenya.
4.Is growth quantitative or qualitative?Show answer
Quantitative.
5.Which index is an indicator of development?Show answer
The Human Development Index.
6.Can growth occur without development?Show answer
Yes.

Developed and Developing Economies, Economic Growth and Economic Development: frequently asked questions

Why is real income used for growth?

To remove the effect of price rises so that only the rise in output is counted.

Is a large total income the same as a high standard of living?

No. Per capita income is a better guide.

Is India developed?

It is classed as a developing economy.