What is the main criterion used by the World  Bank in classifying different countries? Describe  its limitations. 

 (Board Term-I, 2016-17) 


Points to remember 

  1. The average income, i.e., per capita income is  the main criterion used by the World Bank in  classifying different countries.
  2. Countries in which income rises along with the standard of living are called  “Developing Countries”
  3.  A country that does not have high income and the standard of living is also low is considered as “Underdeveloped Country”. 

Limitations of using Per capita income-

  1. Does not provide a proper distribution of income t different levels.
  2. It hides disparities 
  3. Only covers quantitative aspects , ignoring other factors.

Answer to be Written

  1. In World Development Reports, brought out by the World Bank, the average or per capita income criterion is used in classifying countries. 
  2.  Countries with a per capita income of US$ 49,300 per annum and above in 2019, are called high-income or rich countries.
    • Rich countries are generally referred to as developed countries , with the exception of Middle Eastern countries and a few other small countries.

       3.Countries with per capita income of US$ 2500 or less are called l ow-income countries.  

    • India is classified as a low-middle-income country since its per capita income in 2019 was only US$ 6700.

Limitations of average income as a measure of development-

  1. It doesn’t tell how income is distributed among people. There may be a very large number of poor people in society but only a handful of very rich persons. Per capita income will not reflect these differences.
  2. People can be neither rich nor poor, but in another country with the same average income, one person can be enormously wealthy while others are poor. As a result, the measure of per capita income does not provide an accurate picture of a country. Hence, it hides disparities.
  3. Doesn’t tell about the education, medical facilities, quality of the environment , and other services that influence the quality of life.
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Davneet Singh has done his B.Tech from Indian Institute of Technology, Kanpur. He has been teaching from the past 14 years. He provides courses for Maths, Science, Social Science, Physics, Chemistry, Computer Science at Teachoo.