Developed market
Country that is most developed in terms of its economy and capital markets
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Definition and criteria
No single, universally accepted definition of a developed market exists, as international organizations, rating agencies, and financial institutions apply varying baseline criteria. Despite these differences, classifications consistently rely on a core set of macroeconomic benchmarks. Chief among these are high gross domestic product (GDP) and gross national income (GNI) per capita, which typically reflect advanced levels of industrialization and a predominant shift toward a service economy. These economic indicators generally correlate with high standards of living, extensive public infrastructure, and elevated life expectancy.
Financial market maturity serves as a critical secondary determinant for classification. Developed markets are characterized by highly liquid, deep, and well-established financial systems, including robust stock, bond, and foreign exchange markets. To sustain this liquidity, these economies maintain high levels of openness to foreign investment, efficient regulatory oversight, and legal frameworks that permit the relatively unrestricted movement of international capital.
The operational stability of these markets is underpinned by strong institutional governance and political stability. Developed market frameworks require robust legal systems that predictably enforce contracts, protect investor interests, and uphold private property rights. The presence of transparent regulatory bodies and consistent public institutions reduces sovereign risk and systemic risk, fostering the predictable economic environment necessary for large-scale commerce.
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Classification
Several major international organizations and index providers classify countries or territories into developed or comparable categories, using their own methodologies.
MSCI
MSCI, a leading global index provider, evaluates equity markets annually to determine whether they should be classified as developed, emerging, frontier, or standalone. The MSCI Market Classification Framework uses three main criteria, which include economic development, which considers the sustainability of economic development and is primarily used to determine developed-market status; size and liquidity requirements, which determine which securities meet the minimum investability requirements for the MSCI Global Standard Indexes; and market accessibility, which reflects the experiences of international institutional investors in accessing and transacting in a given equity market, based on five criteria.
The MSCI World Index tracks large and mid-cap stocks across nations that successfully meet these developed-market standards. As of December 2025, the index encompassed 23 markets: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, United Kingdom, and the United States. Following subsequent reviews, MSCI announced that Greece would be reclassified from emerging to developed market status, with the transition scheduled to take effect in May 2027.
FTSE Russell
FTSE Russell, another major index provider, uses a four-tiered equity country classification system: Developed, Advanced Emerging, Secondary Emerging, and Frontier. The classification process focuses on a country's political and market environment and is largely independent of gross national income (GNI) or economy size. FTSE Russell's criteria for developed market status include high income (as measured by the World Bank GNI per capita rating), a well-developed regulatory compliance, fair treatment of minority shareholders, openness to foreign ownership, ease of capital repatriation, and efficient custody and settlement systems.
FTSE Russell classifies 26 markets as Developed.
International Monetary Fund
The International Monetary Fund (IMF) uses the term "advanced economies" to describe the most developed countries in its World Economic Outlook. As of April 2026, the IMF classified 43 economies as advanced. The classification is not based solely on income but also considers financial market maturity, technological capability, and other structural factors. The list includes major economies such as the United States, Japan, and Germany, as well as smaller, highly specialised economies like Singapore, Ireland, and New Zealand.
World Bank
The World Bank Group classifies countries into four income groups, such as low, lower-middle, upper-middle, and high-income, based on gross national income (GNI) per capita calculated using the Atlas method. For the 2027 fiscal year, the high-income threshold was set at a GNI per capita of $14,375 or more. As of 2026, the World Bank classified 87 countries and territories as high-income economies. The World Bank also includes an Organisation for Economic Co-operation and Development (OECD) subcategory within its high-income group.
Other index providers
Other index providers, such as S&P Dow Jones Indices and STOXX, also maintain their own classifications of developed markets. These classifications may differ slightly from those of MSCI and FTSE Russell. For instance, FTSE Russell and S&P Dow Jones Indices classify South Korea as a developed market, whereas MSCI has historically classified it as an emerging market, although this has been subject to review. In September 2027, S&P Dow Jones is scheduled to reclassify Poland from Emerging to Developed market status.