What is the Main Criterion used by the World Bank in Classifying Different Countries? What are the Limitations of this Criterion, if Any

By Shivank Goel|Updated : September 8th, 2022

The main criterion used by the World Bank in classifying different countries is the per capita income. While it is used by the World Bank to develop its reports, considering the criterion alone has certain limitations. Before discussing the limitations of the classification of countries based on their per capita income, check out the pointers below:

  • Per capita income refers to the average income, which can be calculated by dividing the total income of the country by its total population.
  • As per the World Bank, the countries with a per capita income of US$ 12,616 per annum and above are called rich countries.
  • Countries with a per capita income of US$ 1,035 or less are called low-income countries.
  • Rich countries around the world only consist of already developed countries and certain Middle Eastern countries.

The World Bank uses the data received from 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:

  • The growth and prosperity in a country cannot solely be indicated by the per capita income of that country.
  • It ignores other indicators of growth such as freedom, education, equality, liberty, security, health, pollution levels, etc.

Main Criterion used by the World Bank in Classifying Different Countries

The World Bank uses the per capita income of the country 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 condition of the country on various other factors. The per capita income as a criterion to classify countries is limiting because the growth of a country is based on many other things like education, equality, health, pollution levels, etc.

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FAQs

  • The World Bank classifies countries on the basis of their per capita income. Per capita income refers to the average income of the country. This can be calculated by dividing the total income of the country by its total population.

  • There are many limitations to using the per capita income as a criterion to classify countries. One such limitation is the fact that income is not the sole indicator of growth or prosperity in a country.

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