Q. 144.2( 15 Votes )

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

Answer :

Criterion use by the world bank in classifying the different countries is the per capita income method. In this method, the income of a country is divided by the total population which gives the average income of a country.
World development report which came in 2006 states that in 2004 countries with per capita income of Rs 4,5300 or above per annum is regarded as rich and countries with per capita income is Rs 37000 or less per annum as low-income countries.

There are various limitations to this method because of the following reasons:
1). This method only tells us about the average income of a country but not about the unequal distribution of wealth. It does not explain the reasons for the rising gap between the rich and poor.
2). The population is the significant factor here because countries with a high population will tally a low level of income.
3). Countries with high per capita income do not explain the basic rights and facilities provided to the citizens.


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