Developed market

Developed markets

Developed markets present only in one index

Not mentioned by MSCI, FTSE Russell, or S&P Dow Jones Indices

Short description: Country that is most developed in terms of its economy and capital markets

For broader coverage of this topic, see Developed country.

A developed market refers to the financial markets of countries exhibiting advanced economic structures, including high per-capita income, sustained growth, industrialized sectors, and sophisticated infrastructure that supports efficient capital allocation.[1] These markets feature mature equity and debt exchanges with high liquidity, transparency, and investor protections enforced through stringent regulations, distinguishing them from emerging markets where such attributes are less established.[2] Classification as developed typically hinges on empirical criteria like gross national income thresholds, market size, trading volume, and accessibility for foreign investors, as assessed annually by index providers such as MSCI.[2]

Prominent examples include the United States, Japan, the United Kingdom, Germany, and Canada, which collectively dominate global indices like the MSCI World Index, representing over 80% of its weight due to their large-cap dominance and economic scale.[3] These markets have historically delivered stable returns through diversified sectors such as technology, finance, and consumer goods, underpinned by rule-of-law institutions that minimize expropriation risks and facilitate long-term investment. However, challenges persist, including demographic aging in many such economies leading to slower growth potential, elevated public debt burdens, and vulnerability to monetary policy distortions that can inflate asset bubbles without corresponding productivity gains.[4]

In investment contexts, developed markets serve as benchmarks for portfolio diversification, offering lower volatility compared to emerging counterparts but often lower prospective returns amid saturation and innovation bottlenecks.[5] Their evolution reflects causal pathways from post-World War II industrialization and trade liberalization, fostering capital accumulation that enabled technological leadership, though recent stagnation in total factor productivity highlights limits to further convergence without structural reforms.[6]

## Contents

* 1 Definition and Characteristics
* 1.1 Core Criteria for Classification
* 1.2 Economic and Financial Indicators
* 1.3 Institutional and Regulatory Features
* 2 FTSE Group list
* 3 MSCI list
* 4 S&P list
* 5 STOXX list
* 6 Table
* 7 See also
* 8 References

## Definition and Characteristics

### Core Criteria for Classification

Classification as a developed market hinges on demonstrable economic maturity, robust financial market infrastructure, and institutional stability, as assessed by major index providers such as MSCI, FTSE Russell, and S&P Dow Jones Indices.[7][8] A foundational economic criterion is high gross national income (GNI) per capita, typically exceeding the World Bank's high-income threshold of $13,935.[9] This threshold reflects sustained productivity and living standards, with developed markets required to maintain levels well above emerging economy benchmarks to ensure long-term viability rather than transient booms.[10]

Financial market depth and liquidity form another core pillar, evaluated through metrics like total stock market capitalization as a percentage of gross domestic product (GDP), trading volume relative to market size, and the breadth of listed securities accessible to institutional investors.[2] MSCI, for instance, incorporates size and liquidity requirements to confirm that a market supports efficient global portfolio allocation, excluding those with insufficient free-float-adjusted capitalization or turnover that could distort index tracking.[11] FTSE Russell similarly weighs market infrastructure, including settlement efficiency and dealing costs, alongside quantitative tests for liquidity to differentiate developed from advanced emerging markets.[12] S&P Dow Jones emphasizes macroeconomic stability, such as low inflation and fiscal prudence, integrated with liquidity conditions to ensure markets can absorb large foreign inflows without volatility spikes.

Institutional and accessibility factors underscore the causal link between governance quality and market reliability, prioritizing rule of law, regulatory transparency, and foreign investor protections.[13] MSCI's framework assesses market accessibility via qualitative reviews of barriers like capital controls, taxation, and information disclosure, informed by investor surveys to capture real-world frictions.[2] FTSE Russell incorporates creditworthiness often requiring investment-grade sovereign ratings from agencies like Moody's Ratings or S&P Global Ratings and regulatory environments conducive to timely trade execution and custody.[14] Political stability and policy predictability are qualitative overlays across frameworks, as evidenced by S&P's reliance on global investor feedback to validate conditions like enforceable contracts and minimal expropriation risk, which empirically correlate with lower equity risk premia in developed markets. These criteria are reviewed annually, with reclassifications rare and requiring multi-year evidence of sustainability to avoid rewarding superficial reforms over structural depth.[15]

### Economic and Financial Indicators

Developed markets exhibit advanced economic development, primarily measured by high gross national income (GNI) or gross domestic product (GDP) per capita. Classification frameworks such as MSCI's require GNI per capita to sustain at least 25% above the World Bank's high-income threshold $14,005 in 2023 for three consecutive years as a baseline for developed status evaluation, though established developed markets far exceed this, with averages well into five figures. The International Monetary Fund's (IMF) advanced economies, aligning closely with developed market designations, recorded an average GDP per capita of $61,970 in 2025 projections.[2] These levels reflect sustained productivity, technological adoption, and diversified economies, contrasting with emerging markets where per capita income often lags below $10,000.

Financial indicators underscore the depth and efficiency of capital markets in developed economies. Equity markets typically feature large total market capitalization, often surpassing 100% of GDP, alongside a broad base of listed companies frequently hundreds or thousands per exchange to ensure diversification and scale. FTSE Russell and MSCI both prioritize size metrics, such as minimum investable market capitalization thresholds (e.g., exceeding $1 billion for constituent securities in MSCI reviews), to confirm sufficient breadth for institutional investment.[16][17]

Liquidity remains a hallmark, evaluated through metrics like the annualized traded value ratio (ATVR), where developed markets must achieve at least 20% under MSCI criteria to demonstrate ease of entry and exit without significant price disruption. This encompasses tightness (narrow bid-ask spreads), depth (capacity to absorb large orders), breadth (diverse participant base), immediacy (rapid execution), and resiliency (quick price recovery post-trade). Such characteristics enable high turnover ratios, often above 50% annually, supported by electronic trading platforms, robust clearing systems, and minimal foreign ownership restrictions typically under 10% limits in practice. Debt markets parallel this maturity, with developed sovereign yields reflecting low default risk and active secondary market trading.[2][18]

### Institutional and Regulatory Features

Developed markets are characterized by mature institutional frameworks that emphasize the rule of law, secure property rights, and effective governance mechanisms, which underpin economic predictability and investor protection. These institutions typically include independent judiciaries capable of enforcing contracts and resolving disputes impartially, reducing risks of expropriation or arbitrary interference. According to the World Bank's Worldwide Governance Indicators, developed market economies consistently rank in the upper percentiles for rule of law often exceeding the 90th percentile reflecting high confidence in societal rules, including those governing property and commercial transactions.[19] Such frameworks contrast with those in emerging markets, where weaker enforcement correlates with higher volatility and lower investment inflows.

Regulatory environments in developed markets prioritize transparency, stability, and adherence to international standards, with independent bodies overseeing financial sectors to mitigate systemic risks. Central banks, such as the U.S. Federal Reserve and the European Central Bank (ECB), operate with statutory independence and explicit mandates for price stability, often targeting inflation around 2%, which supports long-term monetary credibility. Financial regulations align with global benchmarks like the Basel III accords for banking capital adequacy implemented fully in jurisdictions like the European Union (EU) and Japan by 2019 and IOSCO's 38 principles for securities regulation, ensuring fair markets, investor safeguards, and efficient infrastructure.[20] These measures, assessed through frameworks like MSCI's market accessibility criteria, confirm developed markets' minimal qualitative barriers, including robust corporate governance and timely financial disclosures.[2]

Corruption levels remain low, bolstering institutional integrity; Transparency International's 2023 Corruption Perceptions Index shows developed markets averaging scores above 80 out of 100, with leaders like Denmark at 90, compared to global averages below 50.[21] This is reinforced by comprehensive anti-corruption laws and oversight, such as the U.S. Foreign Corrupt Practices Act (1977) and equivalent EU directives, which promote ethical business practices and deter bribery. Overall, these features enable efficient capital allocation, with developed markets exhibiting lower default rates and higher credit ratings from agencies like Moody's and S&P, reflecting credible enforcement.[22]

## FTSE Group list

As of October 2024, FTSE Group classifies the following 26 countries as developed markets:[23]

* Australia
* Austria
* Belgium
* Canada
* Denmark
* Finland
* France
* Germany
* Hong Kong
* Ireland
* Israel
* Italy
* Japan
* Luxembourg
* Netherlands
* New Zealand
* Norway
* Poland
* Portugal
* Singapore
* South Korea
* Spain
* Sweden
* Switzerland
* United Kingdom
* United States

## MSCI list

As of June 2025, MSCI classified the following 23 countries as developed markets:[2]

* 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
* United States

## S&P list

As of January 2026, Standard and Poor's classifies the following 25 countries as developed markets:[24]

* Australia
* Austria
* Belgium
* Canada
* Denmark
* Finland
* France
* Germany
* Hong Kong
* Ireland
* Israel
* Italy
* Japan
* Luxembourg
* Netherlands
* New Zealand
* Norway
* Portugal
* Singapore
* South Korea
* Spain
* Sweden
* Switzerland
* United Kingdom
* United States

## STOXX list

As of September 2025, STOXX classifies the following 25 countries as developed markets:[25]

* Australia
* Austria
* Belgium
* Canada
* Denmark
* Finland
* France
* Germany
* Hong Kong
* Ireland
* Israel
* Italy
* Japan
* Luxembourg
* Netherlands
* New Zealand
* Norway
* Poland
* Portugal
* Singapore
* Spain
* Sweden
* Switzerland
* United Kingdom
* United States

## Table

Country  | FTSE[23] | MSCI[2] | S&P[24] | STOXX[25]

|
|
|
|

Australia | Y | Y | Y | Y
Austria | Y | Y | Y | Y
Belgium | Y | Y | Y | Y
Canada | Y | Y | Y | Y
Denmark | Y | Y | Y | Y
Finland | Y | Y | Y | Y
France | Y | Y | Y | Y
Germany | Y | Y | Y | Y
Hong Kong | Y | Y | Y | Y
Ireland | Y | Y | Y | Y
Israel | Y | Y | Y | Y
Italy | Y | Y | Y | Y
Japan | Y | Y | Y | Y
Luxembourg | Y | N | Y | Y
Netherlands | Y | Y | Y | Y
New Zealand | Y | Y | Y | Y
Norway | Y | Y | Y | Y
Poland | Y | N | N | Y
Portugal | Y | Y | Y | Y
Singapore | Y | Y | Y | Y
South Korea | Y | N | Y | N
Spain | Y | Y | Y | Y
Sweden | Y | Y | Y | Y
Switzerland | Y | Y | Y | Y
United Kingdom | Y | Y | Y | Y
United States | Y | Y | Y | Y

## See also

* Developed country
* Emerging market
* First World
* Frontier markets
* Global North and Global South

## References

1. ↑ "Developed Economy: Definition, How It Works, HDI Indicator". Christina Majaski. https://www.investopedia.com/terms/d/developed-economy.asp.
2. ↑ 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 "MSCI 2025 Global Market Accessibility Review Country Comparison Report". https://www.msci.com/downloads/web/msci-com/indexes/index-resources/market-classification/MSCI_2025_GLOBAL_MARKET_ACCESSIBILITY_COUNTRY_COMPARISON_REPORT.pdf. Retrieved 1 February 2026.
3. ↑ "Developed Markets Indexes | MSCI Indexes" (in English). https://www.msci.com/indexes/group/developed-markets-indexes.
4. ↑ "Investment fundamentals: Developed markets". https://www.seic.com/about-sei/thought-leadership/investment-fundamentals-developed-markets.
5. ↑ "Developed Markets" (in en). https://www.morningstar.com/investing-terms/developed-markets.
6. ↑ "What’s the Difference Between Emerging and Developed Markets?" (in en-us). https://www.acorns.com/learn/investing/developed-markets-vs-emerging-markets/.
7. ↑ "Market Classification" (in English). https://www.msci.com/indexes/index-resources/market-classification.
8. ↑ "Equity Country Classification". https://www.lseg.com/en/ftse-russell/equity-country-classification.
9. ↑ "World Bank country classifications by income level for 2024-2025" (in en). https://blogs.worldbank.org/en/opendata/world-bank-country-classifications-by-income-level-for-2024-2025.
10. ↑ "World Bank Country and Lending Groups – World Bank Data Help Desk". https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups.
11. ↑ "Market Classification" (in English). https://www.msci.com/indexes/index-resources/market-classification.
12. ↑ "What’s In Your International Equity ETF?". https://www.etf.com/sections/news/whats-your-international-equity-etf.
13. ↑ "Market Classification" (in English). https://www.msci.com/indexes/index-resources/market-classification.
14. ↑ "What’s In Your International Equity ETF?". https://www.etf.com/sections/news/whats-your-international-equity-etf.
15. ↑ "Market Classification" (in English). https://www.msci.com/indexes/index-resources/market-classification.
16. ↑ "Equity Country Classification". https://www.lseg.com/en/ftse-russell/equity-country-classification.
17. ↑ "Market Classification" (in English). https://www.msci.com/indexes/index-resources/market-classification.
18. ↑ "Measuring Liquidity in Finanical Markets". https://www.imf.org/external/pubs/ft/wp/2002/wp02232.pdf.
19. ↑ "Worldwide Governance Indicators | DataBank". https://databank.worldbank.org/source/worldwide-governance-indicators.
20. ↑ "Objectives and Principles of Securities Regulation". https://www.iosco.org/library/pubdocs/pdf/IOSCOPD154.pdf.
21. ↑ "2023 Corruption Perceptions Index: Explore the results" (in en). 30 January 2024. https://www.transparency.org/en/cpi/2023.
22. ↑ "2023 Corruption Perceptions Index: Explore the results" (in en). 30 January 2024. https://www.transparency.org/en/cpi/2023.
23. ↑ 23.0 23.1 "FTSE Equity Country Classification October 2024 Annual Announcement" (PDF). https://www.lseg.com/content/dam/ftse-russell/en_us/documents/country-classification/ftse-country-classification-update-2024.pdf. Retrieved 3 November 2024.
24. ↑ 24.0 24.1 "Daily Global Index Dashboard". 29 January 2026. p. 5. https://www.spglobal.com/spdji/en/documents/performance-reports/dashboard-daily-global-markets.pdf. Retrieved 1 February 2026.
25. ↑ 25.0 25.1 "Current Country Classification overview" (PDF). p. 1. https://www.stoxx.com/document/Resources/Methodology/Country_Classification/stoxx_regional_classification_20250922.pdf. Retrieved 1 February 2026.

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