What is the Main Criterion used by the World Bank in Classifying Different Countries? What are the Limitations of this Criterion, if any?
By Balaji
Updated on: February 17th, 2023
The main criterion used by the World Bank in classifying different countries is the per capita income. While the World Bank uses it to develop its reports, using the criterion alone has some limitations. The use of per capita income as a criterion for classifying countries is limited because a country’s growth is dependent on many other factors such as education, equality, health, pollution levels, and so on.
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1. Main Criterion used by World Bank in Classifying Different Countries
Main Criterion used by World Bank in Classifying Different Countries
The World Bank uses the country’s per capita income as the main criterion in classifying different countries. Although this criterion enables us to understand the position of different countries on an economic basis, it fails to indicate the country’s condition on various other factors.
Before discussing the limitations of the classification of countries based on their per capita income, check out the pointers below:
- Per capita income is the average income calculated by dividing the country’s total income by its entire population.
- According to the World Bank, rich countries have a per capita income of at least US$ 12,616 per year.
- Low-income countries have a per capita income of $1,035 or less.
- Only developed countries and certain Middle Eastern countries are rich countries worldwide.
- Rich nations have a per capita income of US$ 12616 per annum and more as of 2012.
Limitations of Criterion Used by the World Bank
The World Bank uses the data received for calculating the per capita income of the countries of the world to create its Development Reports.
Here are some of the limitations of using this method to classify different countries:
- A country’s growth and prosperity cannot be determined solely by its per capita income.
- It disregards other growth indicators such as freedom, education, equality, liberty, security, health, pollution levels, etc.
- Unless the total of your community takes preventive measures, money may be unable to rescue a person from infectious diseases.
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