Question

What is the main criterion used by the World Bank in classifying different countries? What are the limitations of this criterion, if any?

Answer 1

The criterion used in classifying countries is the per capita income of a nation. This criterion is used by the World Bank in its World Development Reports.

• Countries with per capita income of US$ 1035 or less are called low-income countries.
• As per 2012, rich countries are the countries with per capita income of US$ 12616 per annum and above.
• In 2012 per capita income of India was just US$ 1530 per annum, hence it was classified in the category of low middle income countries.
• Generally developed countries are the rich countries, excluding some small countries and countries of the Middle East.
• Per capita income is nothing but the average income.
• Average income is the total income of the country divided by its total population. Hence, the right measure used in comparing different nations is comparison of average incomes of nations.

Limitations

• Better income is the only goal for people. They have many other goals in life such as freedom, equal treatment, respect for other people, security etc. There are a whole gamut of things which are not included in the criterion used by the World Bank for comparing countries.
• For example, one cannot say everything is fine and developed by merely checking the per capita income, there are other factors like infant mortality rate which needs to be measured.
• Health, Nutrition, Education levels are other important metrics which are not measured through the development report given out by the World Bank.
• Unless the whole of your community takes preventive steps, money may not be able to protect a person from infectious diseases
• Money cannot ensure that you get unadulterated medicines.
• Money alone cannot buy you a pollution-free environment.
• Income by itself is not a completely adequate indicator of material services and goods that citizens are able to use.