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The Heckscher-Ohline model and Stolper-Samuelson theorem state that the relation between inequality and international trade is moderated by the level of economic development. I am studying this relationship for EU countries. What would be the best way to classify EU countries into developing and industrialised ones? Or should I just assume they are all industrialised (e.g. they all score quite high on the Human-Development-Index etc.)?

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  1. There is no strict widely accepted definition of developing and industrialized country. Hence you could in principle choose any indicator you can justify. However, HDI looks at number of non-economic factors so I do not think you can easily justify using HDI.
  2. I can't point to exact papers but I seen on conferences that some authors use the World Bank classification of low income and lower-middle income countries as developing and upper-middle income and high income countries as developed. Such classification seems to me more sensible than using HDI.
  3. Several international organizations already make their lists of developing countries. For example, IMF does that in its World Economic Outlook reports. You can simply defer to a classification of established organization such as IMF or UN etc instead of making your own classification. You should however make sure you understand the methodology behind their classification.
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