Industrialised vs developing countries

A company’s export marketing strategy will depend to a large extent on whether the target market is to be found in an industrialised or a developing country.

Industrialised countries

The terms industrialised or developed countries generally refer to the member countries of the Organization for Economic co-operation and Development (OECD) – they are also often referred to as the First World (perhaps unfairly so) They include the United States, Canada, the western European countries, Japan, Australia and New Zealand. They tend on the whole to be wealthy (i.e. they have a higher per capita income than most other countries) and they are oriented towards a free market economy. Population growth is often stagnant and the population tends to be an ageing one. Industrialised countries offer markets for a wide range of products in the luxury and high-tech categories.

Developing countries

Developing countries on the other hand refer to the more than 150 African, Asian and Latin American countries which are economically less advanced than the First World. Some of the characteristics of developing countries are:

  • A low average real per capita income
  • A high proportion of the labour force being involved in agriculture and other primary activities
  • Low life expectancy
  • A high rate of illiteracy
  • A high rate of population growth
  • In contrast to developed countries, third world countries tend:
  • To have serious shortages of foreign exchange
  • To be more protectionist about their economies and industries than industrialised countries. (i.e. Trade is restricted in order to protect local producers against competition from foreign produces of the same product(s), as well as to stimulate employment).

Developing countries have a burgeoning youthful population and a great need for necessities at low prices. They often provide lucrative markets for services and products associated with infrastructure upgrading, particularly where development aid is available to fund certain projects.

Economies in transition

Since the fall of the Berlin Wall, a new category, Economies in Transition, has come about. These include most of the former Soviet Union countries and often include South Africa. Conditions are not as bad as in developing countries but neither are they developed. The potential in these markets is great, as are the risks.

Where does South Africa fall?

South Africa is generally acknowledged as having a dual economy. This is because South Africa, while in many respects a developing country (characterised by a large rural population growth rate, relatively low GDP per capita, etc.), nevertheless displays several attributes of a developed country (evidenced by, for example, a relatively sophisticated industrial sector, high living standards amongst certain sectors of the population, an excellent banking sector, good roads, a sophisticated telecommunications infrastructure, etc.).