What is the main criterion used by the world Bank in classifying different countries? What are the limitations of this criterion?

Question

Answer

The main criterion used by the World bank in classifying different countries is Per capita income or Average Income.

1) According to world development report, the countries with per capita income of US$ 12, 736 per annum and above in 2013, are called rich countries.

2) The countries with per capita income of US$ 1045 or less are called low income countries.

Limitations of this criterion are as follows :-

1) It doesn't tell us how the income is distributed among people.

2) Some may be very rich but the masses maybe poor. That is, it hides disparities.

3) Per capita income cannot be regarded as the sole indicator of development. Other Ares are also important like literacy rate, life expectancy , infant mortality rate, etc

Hope this will help you :)

Answer

Answer

The main criterion used by the World Bank in classifying different countries is their Gross National Income (GNI) per capita.

Gross National Income (GNI) per capita:
- GNI per capita is the total income earned by a country's residents and businesses, divided by its population.
- It is a measure of the country's economic output that accounts for its size and wealth.
- Countries with a high GNI per capita are classified as high-income countries, while those with a low GNI per capita are classified as low-income countries.

Limitations of this criterion:
- GNI per capita does not take into account the distribution of income within a country. A country with a high GNI per capita may still have a significant proportion of its population living in poverty.
- GNI per capita also does not account for other factors that may affect a country's development, such as education, health, and infrastructure.
- Additionally, GNI per capita can be influenced by factors such as natural resource extraction, which may not be sustainable in the long term.

In conclusion, while GNI per capita is a useful criterion for classifying countries, it should not be the only factor considered when assessing a country's development. Other factors, such as education, health, and infrastructure, should also be taken into account.

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