The Global Economic Development Index: an economic, social, and institutional approach

Problemas del Desarrollo. Revista Latinoamericana de Economía, vol. 56, núm. 222, julio-septiembre 2025. The Global Economic Development Index: an economic, social, and institutional approach a b Rodrigo Aliphat Rodríguez and Andrés Blancas Neria Fecha de recepción: 28 de octubre de 2024. Fecha de aceptación: 30 de abril de 2025. https://doi.org/10.22201/iiec.20078951e.2025.222.70297 Abstract. This paper proposes an original composite index, the Global Economic Development Index (GEDI), uniquely integrating economic, social, and institutional factors. GEDI distinguishes emerging from developed economies, identifying specific economic, social, and institutional challenges and opportunities. It examines 129 economies, representing approximately 95% of global GDP in 2017, using over 30 indicators across 10 variables, including financial development, income distribution, environmental sustainability, and corruption. This index improves upon traditional income-based classifications used by institutions such as the World Bank (WB) and International Monetary Fund (IMF), which often group diverse economies like China, Vietnam, and Bulgaria together despite significant structural and developmental differences. Thus, GEDI provides a more comprehensive understanding of economic gaps between developed and emerging economies. Key words: emerging economies; economic and social development. El Índice de Desarrollo Económico Global: un enfoque económico, social e institucional Resumen. Este trabajo propone un índice original compuesto, el Índice de Desarrollo Económico Global (IDEG), que integra de forma única factores económicos, sociales e institucionales. El IDEG distingue las economías emergentes de las desarrolladas, identificando retos y oportunidades económicas, sociales e institucionales específicos. Examina 129 economías, que representan aproximadamente el 95% del PIB mundial en 2017, utilizando más de 30 indicadores a través de 10 variables, incluyendo el desarrollo financiero, la distribución del ingreso, la sostenibilidad ambiental y la corrupción. Este índice mejora las clasificaciones tradicionales basadas en los ingresos utilizadas por instituciones como el Banco Mundial (BM) y el Fondo Monetario Internacional (FMI), que a menudo agrupan economías diversas como China, Vietnam y Bulgaria a pesar de las importantes diferencias estructurales y de desarrollo. Así pues, el IDEG proporciona un entendimiento más completo de las diferencias económicas entre las economías desarrolladas y las emergentes. Palabras clave: economías emergentes; desarrollo económico y social. Clasificación JEL: O11; F63; P48. a b Centro de Investigación y Docencia Económicas, A.C., México and Universidad Nacional Autónoma de México-Instituto de Investigaciones Económicas, México. Email addresses: and , respectively. 115 Rodrigo Aliphat Rodríguez and Andrés Blancas Neria 1. Introduction The classification systems employed by international institutions such as the International Monetary Fund (imf) and the World Bank (wb) rely predominantly on income levels, thereby omitting social and institutional dimensions, including income distribution, corruption, governance quality, and financial development. Conversely, the Human Development Index (hdi) of the United Nations Development Program (undp, 2018) emphasizes social dimensions–health, education, and living standards–but neglects economic indicators such as productive structure, technological capabilities, trade balance, and comprehensive financial development. Consequently, these classification approaches implicitly assume homogeneity across all developing economies. This simplification underestimates distinctions among emerging economies; for instance, economies such as China, Vietnam, and Bulgaria share similar classifications based solely on income, despite exhibiting significantly different economic structures, developmental trajectories, and institutional contexts. In response to these limitations, this paper introduces an original methodological contribution: the Global Economic Development Index (gedi). Unlike the hdi and governance-focused indices developed by institutions like the wb–which predominantly focus on either social or institutional factors–gedi integrates economic indicators such as high-technology exports, manufacturing performance, services production, trade balances, and comprehensive financial development, alongside essential social and institutional dimensions. Thus, gedi provides a nuanced and comprehensive framework capable of capturing the multidimensional nature of developmental gaps among economies (Tezanos Vázquez and Sumner, 2013; Fialho and Bergeijk, 2016). Multidimensional classifications, such as gedi, hold significant implications for international policymaking and resource allocation. Differentiating among emerging economies allows international organizations, governments, and development agencies to design targeted economic interventions, policies, and strategic resource distribution. Moreover, understanding structural, institutional, and social factors through a unified and replicable index facilitates comparative analyses, supporting decision-making processes aimed at addressing structural vulnerabilities, facilitating sustainable industrialization, and achieving inclusive economic development (Rodrik, 2014; Stiglitz et al., 2009). The paper is structured into six sections. The second section examines income-level classifications and the hdi framework used by international ins116 The Global Economic Development Index: an economic, social, and institutional approach titutions. The third section defines emerging economies, highlighting aspects of their productive structures and their social and institutional developmental challenges. The fourth section describes the selection of variables, and the methodological process used to construct the gedi database. The fitht section details the estimation of gedi scores for 129 economies, applying the undp’s hdi methodology, and presents robustness tests and comparative analyses that validate the accuracy and reliability of the index. The final section offers concluding insights and implications derived from our findings. 2. Classifications and indices of countries Multidimensional methods are fundamental for accurately classifying economies, as classifications based solely on income or isolated social factors provide incomplete perspectives. Hausmann et al. (2007), and North (1990) emphasize that institutional frameworks and productive structures critically shape economic development paths. Additionally, Fagerberg and Srholec (2017) underline the relevance of institutional quality, technological capabilities, and structural economic factors, arguing these aspects substantially explain development divergences inadequately captured by traditional indices. Historically, economic classifications have reflected prevailing geopolitical and economic contexts. Earl (...truncated)