What are the main criteria used by the World Bank in classifying different countries? What are the limitations of this criterion? Explain in detail.

Q: What are the main criteria used by the World Bank in classifying different countries? What are the limitations of this criterion? Explain in detail.

World Bank Classification Criteria\nThe World Bank uses 'Per Capita Income' (also known as average income) as the main criterion for classifying different countries. Calculation of Per Capita Income: It is calculated by dividing the total income of a country by its total population. For international comparison, per capita income is calculated in US Dollars. Income Categories (as per World Bank Reports): High-Income Countries (Developed): Countries with a per capita income of US $49,300 per annum and above in 2022 are called high-income countries. Low-Income Countries: Countries with a per capita income of US $2,500 or less per annum are classified as low-income countries. Middle-Income Countries: India falls in the category of low-middle-income countries because its per capita income in 2022 was around US $2,400 per annum. Limitations of Per Capita Income as a Criterion\nWhile average income is useful for comparison, it has major limitations: Hides Disparities/Inequality: Average income hides income disparities within a country. Two countries may have the same average income, but one may have an equitable distribution of wealth (most people are relatively well off) while the other may have extreme poverty alongside extreme wealth. Ignores Non-Material Goods: Per capita income does not measure critical aspects of human life like infant mortality rate, literacy levels, healthcare access, clean environment, gender equality, and personal freedom. Conclusion\nDue to these limitations, although the World Bank criterion is important for economic comparison, other indicators like the Human Development Index (HDI) are increasingly used to measure true development.

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World Bank Classification Criteria
The World Bank uses 'Per Capita Income' (also known as average income) as the main criterion for classifying different countries. Calculation of Per Capita Income: It is calculated by dividing the total income of a country by its total population. For international comparison, per capita income is calculated in US Dollars. Income Categories (as per World Bank Reports): High-Income Countries (Developed): Countries with a per capita income of US $49,300 per annum and above in 2022 are called high-income countries. Low-Income Countries: Countries with a per capita income of US $2,500 or less per annum are classified as low-income countries. Middle-Income Countries: India falls in the category of low-middle-income countries because its per capita income in 2022 was around US $2,400 per annum. Limitations of Per Capita Income as a Criterion
While average income is useful for comparison, it has major limitations: Hides Disparities/Inequality: Average income hides income disparities within a country. Two countries may have the same average income, but one may have an equitable distribution of wealth (most people are relatively well off) while the other may have extreme poverty alongside extreme wealth. Ignores Non-Material Goods: Per capita income does not measure critical aspects of human life like infant mortality rate, literacy levels, healthcare access, clean environment, gender equality, and personal freedom. Conclusion
Due to these limitations, although the World Bank criterion is important for economic comparison, other indicators like the Human Development Index (HDI) are increasingly used to measure true development.

MP Board · Class 10 · Social Science · Economics: DevelopmentWhat are the main criteria used by the World Bank in classifying different countries? What are the limitations of this criterion? Explain in detail.

World Bank Classification Criteria\nThe World Bank uses 'Per Capita Income' (also known as average income) as the main criterion for classifying different countries.

Limitations of Per Capita Income as a Criterion\nWhile average income is useful for comparison, it has major limitations:

Conclusion\nDue to these limitations, although the World Bank criterion is important for economic comparison, other indicators like the Human Development Index (HDI) are increasingly used to measure true development.