What is the main Criterion used by the World Bank in classifying diffe...
The main criterion used by the World Bank in classifying different countries is their Gross National Income (GNI) per capita. GNI per capita is the total value of goods and services produced by a country in a year, divided by its population. The World Bank classifies countries into four categories based on their GNI per capita:
1. Low-income countries: Countries with a GNI per capita of $1,035 or less.
2. Lower-middle-income countries: Countries with a GNI per capita between $1,036 and $4,045.
3. Upper-middle-income countries: Countries with a GNI per capita between $4,046 and $12,535.
4. High-income countries: Countries with a GNI per capita of $12,536 or more.
Limitations of this Criterion:
1. Inequality: GNI per capita does not account for income inequality within a country. Two countries with the same GNI per capita can have vastly different levels of income inequality. This means that some people in a country may be living in poverty even if the country is classified as middle or high-income.
2. Purchasing power: GNI per capita is calculated using market exchange rates, which do not reflect the purchasing power of a country's currency. This can lead to an overestimation or underestimation of a country's economic strength.
3. Informal economy: GNI per capita does not account for the informal economy, which can be a significant part of the economy in some low-income countries. This means that the GNI per capita may not accurately reflect the economic activity in these countries.
4. Natural resources: GNI per capita does not account for a country's natural resources, which can be a significant source of income in some countries. This means that some countries may have a higher GNI per capita due to natural resources rather than their economic strength.
In conclusion, while GNI per capita is a useful criterion for classifying countries, it has its limitations and should be used in conjunction with other indicators to get a more complete picture of a country's economic situation.
What is the main Criterion used by the World Bank in classifying diffe...
Per capita income is the main Criterion used by the World Bank in classifying different countries . the limitation of this Criterion are
. per capita income is useful for comparison but it doesn't show the distribution of income
. it also ignore other factors such as infant mortality rate literacy level Healthcare etc.
. per capita income does not give the true picture as their is a use population which does not at all like children and the senior citizen but they are also included while calculating per capita income.
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