The GEM classification of economies by economic development level is based on the phases set out by the World Economic Forum (WEF) in its Global Competitiveness Report.  

According to WEF’s classification:

• Factor-driven economies are the least developed. They are dominated by subsistence agriculture and extraction businesses, with a heavy reliance on (unskilled) labour and natural resources;
• Efficiency-driven economies are increasingly competitive, with more-efficient production processes and increased product quality; 
• Innovation-driven economies are the most developed. In this phase, businesses are more knowledge-intensive, and the service sector expands. 
  

GEM groups economies in transition from factor- to efficiency-driven with the factor-driven economies, while those in transition from efficiency- to innovation-driven have been included in the efficiency-driven category.