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What is the main criterion used by the World Bank in classifying different countries? Describe its limitations.
(Board Term-I, 2016-17)
Answer:
Points to remember
- The average income, i.e., per capita income is the main criterion used by the World Bank in classifying different countries.
- Countries in which income rises along with the standard of living are called “Developing Countries” .
- 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-
- Does not provide a proper distribution of income t different levels.
- It hides disparities
- Only covers quantitative aspects , ignoring other factors.
Answer to be Written
- In World Development Reports, brought out by the World Bank, the average or per capita income criterion is used in classifying countries.
- Countries with a per capita income of US$ 49,300 per annum and above in 2019, are called high-income or rich countries.
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- 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.
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- 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-
- 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.
- 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.
- Doesn’t tell about the education, medical facilities, quality of the environment , and other services that influence the quality of life.
