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.)?
- 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.
- 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.
- 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.