Economics Index and Qualifications
By Richard Bruce BA, MA, and PhC in Economics
Former Instructor St. John's University, New York City

---

List of Developed Democracies
and Why it Matters

This is a list of countries with more than a million population that are considered free by Freedom House and high income or developed by World Bank in 2022. The World Bank counts high-income countries as developed. There are other standards, but one might consider this a list of 1st World countries. They have arrived economically and politically. Furthermore, history suggests their status is permanent.

List of the 38 Developed Democracies
with Populations Greater than One Million

1. Australia
2. Austria
3. Belgium
4. Canada
5. Chile
6. Croatia
7. Cyprus
8. Czech Republic
9. Denmark
10. Estonia
11. Finland
12. France
13. Germany
14. Greece
15. Ireland
16. Israel
17. Italy
18. Japan
19. Korea (South)
20. Latvia
21. Lithuania
22. Netherlands
23. New Zealand
24. Norway
25. Panama
26. Poland
27. Portugal
28. Romania
29. Slovakia
30. Slovenia
31. Spain
32. Sweden
33. Switzerland
34. Taiwan
35. Trinidad and Tobago
36. United Kingdom
37. United States
38. Uruguay

Here is a link to a map of the above list of developed democracies.

First World Statistics

All together these industrial democracies had about 1,155 million people in 2020. This is about 15 percent of the world's population. Together they have about sixty percent of the world's gross income, about 51 trillion dollars in 2018.

America has a population of 331 million, about 29% of the population of the above industrial democrcies, and America's gross national income was over 20 trillion dollars in 2018, about 40% of the total for the First World countries.

Why is this Important?

Why is it important which countries are economically developed democracies? Developed democracies have three important virtues. First, they are politically stable. Second, their economies do not suffer serious declines, they are economically stable. And third, they do not fight wars with each other. As a group, they are internationally stable.

Because of the political and economic stability, once an economically developed democracy almost always an economically developed democracy. Because they never fight wars with one another a world in which all the countries are developed democracies would be a world at peace. So the fact that a country is a developed democracy is important for the people of that nation, they and their children will live in a free and prosperous nation. It is also important to the rest of the world because it is another step toward a long-term world peace.

Let us examine this in a little more detail.

Politically Stable

The richer a democracy becomes the less likely that a dictator will be able to seize power. I am arguing that once a democracy reaches GNI 13,205 in 2021 US dollars, the threshold for high income or developed according to the World Bank, they are very likely to remain a democracy. As far as I have been able to determine there is only one counter example, Hungary, and even that one is rather marginal. Hungary is right on the boarderline between free and partially free, and is a long way away from Freedom House's not free category.

But there is nothing magic about this number. As democracies become richer the probability they will fall to a dictator decreases. By the time they are declared developed the probability is so low there is no clear example of it ever happenng.

The only non-oil rich country that I know of to move from free to partially free was Hungary. Hungary is now listed by Freedom House as partially free. It has a score of 70. Some countries with that score are listed as free. So Hungary is on the border between free and partially free and a long way away from the not free category.

I am somewhat suspicious of this determination by Freedom House. They list the fact that Hungary is not taking Muslim refugees as a reason for excluding them from the free category. What does that have to do with freedom and democracy? There seems to be a trend where Freedom House is allowing its distaste for some governments to influence their ranking. A free country is one where the voters vote the way Freedom House wants them to vote.

At any rate countries that are as free and democratic as Hungary almost never engage in wars with free and democratic countries.

The richest non-oil rich country to move from partially free to not free is Turkey. This happened very recently when Erdogan reacting to the attempted or faked coup by the army clamped down. Of course Turkey is Muslim which is an important risk factor, and democracy had only been imperfectly established, with the military playing a supervisorial role. Turkey was ranked as a partially free country by Freedom House prior to the coup. On the other hand most of Turkey's exports are industrial, not natural resources. Industrial exporting democracies are more stable, and Turkey was very close to the threshold for developed status when it decended from partially free to not free status.

The richest non-oil rich, non Muslim democracy that I have found that was taken over by a dictator was Argentina, which was about two-thirds the threshold. Argentina was and still is highly dependent on natural resource exports. Natural resource exports frequently change drastically in price, so a country relying on them can suffer a disastrous decline. Industrial exporting countries tend to be more stable.

Germany was the richest non-Muslm, industrial exporting country where power was seized by a dictator. When Hitler seized power in 1933 Germany was probably no more than half the World Bank's threshold for developed nations. Of course, I am referring to the recent threshold. The World Bank and the threshold did not exist in 1933. Every country with more than a million people in 1933 was below the threshold for developed nations. According to my guesstimate, the United States became the first developed country in 1941, just before entering World War 2. Germany was somewhat richer just before World War 1 than any time between the end of the war and Hitlers take over, but I do not think it was richer than half of what we now call a developed nation.

This is important today because China has probably passed where Germany was when Hitler took over. As China is definitely an industrial exporting nation we can now say that China is probably richer than any non-Muslilm industrial exporting democracy which was taken over by a dictator. If China becomes a democracy in the near future, the survival of that democracy is nearly certain.

More generally we can safely say that high-income democracies are likely to stay democracies, with a couple of big exceptions. Oil-rich countries do not follow these rules. Or alternatively, you could say they are an extreme case of the economic and political instability of natural resource producers in general. The point is they are not necessarily democratic or stable. So it seems very likely that all the countries on the list above will avoid dictatorship with the exception of oil rich Trinidad and Tobago. Not that I am saying Trinidad and Tobago is doomed, I know little about it. I am just saying their success is not as certain.

The other exception is Muslim countries. Will high income Muslim nations that are not oil-rich maintain democracies? The failure of Turkey suggests that they may not, but as there are no high income Muslim nations that are clearly not oil-rich we have no data on the topic.

Economically Stable

I would not be so sure of the political stability if developed democracies were not so economically stable, but they are. Of course, developed democracies can suffer recessions where the income per capita declines a percentage point or two, but generally, the direction is up. Furthermore, some developed democracies, Japan, Sweden and Finland, have suffered a lost decade of growth, and indeed now much of the industrial world was recently suffering what may become a lost decade of growth, but once again no huge declines of the type that might threaten their stability. Even though many nations have suffered in the recent recession I might note that none have been taken over by dictators, and most remain stubbornly at the highest level of freedom and democracy according to the Freedom House ratings.

Once again, oil rich countries are not as stable as countries with broad-based exports because the price of oil can rise and fall dramatically. Saudi Arabia is currently a high-income country, but it can move from upper middle income to high income and back depending on the price of oil. The same is true of Trinidad and Tobago, which is on the list. It was not on the list in 2005 but I believe it was in some earlier years.

Internationally Stable

It has frequently been said that the Canadian-American border is the longest undefended border in the world. Actually, it is the longest border period. But it illustrates the point, economically developed democracies do not fight wars against one another.

Actually even developing nations are pretty good at keeping the peace these days. We have come a long way since the Middle Ages when the average country was at war with one of its neighbors in half of all years. If we were like the countries of the Middle Ages we might be at peace this year, at war with Canada the next, then another year of peace, followed by a war with Mexico, and so on. Today almost all nations do better than that. Iraq under Saddam being the only recent exception.

On the other hand, they did not have nuclear weapons in the Middle Ages. So our search for peace takes on an urgency that it did not have back then. We naturally want to achieve a high level of certainty that those nuclear weapons that remain will "rust in peace."

Growth of Total Population of the Developed Democracies

The population growth of high income or developed countries is .6 percent a year according to the World Bank. The population growth of the whole world is 1.2 percent. So the First World would be falling behind at something like .6 percent a year if developing nations were not becoming developed democracies. But the addition of many nations between 2005 and 2012 has more than made up for slower population growth of the developed democracies.

With future additions like Brazil, Mexico, China, and eventually India and most of the rest of the developing nations the population of the developed nations will grow much faster than world population as a whole and I expect almost all countries to have developed economies some time in the second half of this century. I have a web page on the growth of Third World nations to First World status. here.

Near Misses-High Income and Partially Free

Singapore and Kuwait have high incomes but they are partially free according to Freedom House. Naturally, lovers of freedom will find this disappointing, but lovers of peace might note that we do not have serious military conflicts with countries that are partially free.

In fact, it is normally the countries with the lowest scores, 7, that the United States and the West have difficulties with. This group includes North Korea, Saudi Arabia, Sudan, and Syria. We also have had some difficulties with the next three higher levels, China at 6.5, Iran at 6, and Russia at 5.5, but our problems are concentrated with the lowest scores, the sevens.

So if one was just considering the issue of peace, and that is a pretty central issue, one could justify including the partially free.

Even Authoritarian Governments are Relatively Peaceful Recently

While authoritarian governments do occasionally fight wars among themselves, nevertheless, old fashioned wars of conquest have been fairly rare in recent years. Even dictatorships are pretty peaceful. Thus if our objective is peace it will frequently be a good idea to tolerate a dictatorship until it eventually becomes a democracy. Over the very long run we may find well armed, particularly nuclear, dictatorships a real problem because eventually if enough centuries pass there is likely to be a war, but it could be reasonably argued that we are too quick to resort to military action to bring down dictators.

Nevertheless, it is quite reasonable to prefer democracy for the sake of peace and to encourage it by pressure short of war. Most people would like to live in a country that is rich and free, so we are not imposing an unpopular program. Developed democracies have maintained political and economic stability for decades, and peace among themselves, so it is not an unproven program. In fact it not only has worked, it has never failed. It appears to be fool proof. Finally, most people would agree that blowing the world to smithereens in a nuclear conflict would be a bad thing.

---

How will the 3rd world develop? This popular web page lays out the growth path.

Here is an index to my other pages on economics, and a short review of my qualifications in this field.

Tell me what you think. Here is my contact information..

Last Partial Update November 2, 2022