[Solved] What is the main criterion used by the World Bank in classif (2024)

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[Solved] What is the main criterion used by the World Bank in classif? ›

Detailed Solution

The main criterion used by the World Bank in Classifying Different Countries is based on their per capita income. Per capita income refers to the average income of the country.

The criterion used by the UNDP for measuring development is different from the one used by the World Bank in the sense that it uses a combination of factors such as health education and income as indicators of development. It does not rely solely on per capita income as is the case with the World Bank.

In the World Development Reports, the World Bank classifies countries based on per capita income.

Answer: Explanation: Countries with less than $1,035 GNI per capita are classified as low-income countries, those with between $1,036 and $4,085 as lower middle income countries, those with between $4,086 and $12,615 as upper middle income countries, and those with incomes of more than $12,615 as high-income countries.

For operational and analytical purposes, the World Bank's main criterion for classifying economies is gross national income (GNI) per capita. Every economy is classified as low income, middle income (subdivided into lower middle and upper middle), or high income.

We use averages as they are useful for comparing differing quantities of the same category. This does not show the distribution of things between people. There are limitations of calculating averages because this does not give any information about the distribution of a thing between people.

World Bank uses per capita income as the base for measuring the economic development of any country.

UNDP uses the Human Development Index (HDI) as the main criterion for measuring development.

Solution: The national income is not used by UNDP to compare countries; instead, per capita income or average income is used. The reason is that development not only depends on total income but also on the people who would share it. If the population is significant, an average of one person would be less.

What measure does the World Bank use to classify countries? ›

Countries are classified each year on July 1, based on the estimate of their GNI per capita for the previous calendar year. Income groupings remain fixed for the entire World Bank fiscal year (i.e., until July 1 of the following year), even if GNI per capita estimates are revised in the meantime.

The world bank categorizes countries based on GNI per capita, using the following categories: high income economies, middle income economies, low income economies.

The World Bank Group assigns the world's economies[1] to four income groups – low, lower-middle, upper-middle, and high. The classifications are updated each year on July 1, based on the GNI per capita of the previous calendar year.

The main criterion used by the World Bank in classifying different countries is the per capita income or average income of a person in a country. Limitations of this criterion:It does not tell us about how this average income is distributed among the people in the individual countries.

The criterion used by the UNDP for measuring development is different from the one used by the World Bank in the sense that it uses a combination of factors such as health, education, and income as indicators of development. It does not rely solely on per capita income, as is the case with the World Bank.

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.

The World Bank classifies economies for analytical purposes into four income groups: low, lower-middle, upper-middle, and high income.

What Is Per Capita Income? Per capita income is a measure of the amount of money earned per person in a nation or geographic region. Per capita income is used to determine the average per-person income for an area and to evaluate the standard of living and quality of life of the population.

Developed countries are industrialized, have high standards of living, and have strong economic growth. Developing countries are agrarian (or at least not industrialized), have lower standards of living, and have a very weak economy with slow or nonexistent growth.