What levels are used to classify a country by income?
What Is a Developed Economy?A developed economy is typically characteristic of a developed country with a relatively high level of economic growth and security. Standard criteria for evaluating a country's level of development are income per capita or per capita gross domestic product, the level of industrialization, the general standard of living, and the amount of technological infrastructure. Show
Noneconomic factors, such as the human development index (HDI), which quantifies a country's levels of education, literacy, and health into a single figure, can also be used to evaluate an economy or the degree of development. Key Takeaways
Developed EconomyUnderstanding a Developed EconomyThe most common metric used to determine if an economy is developed or developing is per capita gross domestic product (GDP), although no strict level exists for an economy to be considered either developing or developed. Some economists consider $12,000 to $15,000 per capita GDP to be sufficient for developed status while others do not consider a country developed unless its per capita GDP is above $25,000 or $30,000. The U.S. per capita GDP in 2019 was $65,111. For countries that are difficult to categorize, economists turn to other factors to determine development status. Standard-of-living measures, such as the infant mortality rate and life expectancy, are useful although there are no set boundaries for these measures either. However, most developed economies suffer fewer than 10 infant deaths per 1,000 live births, and their citizens live to be 75 or older on average. A high per capita GDP alone does not confer developed economy status without other factors. For example, the United Nations still considers Qatar, with one of the world's highest per-capita GDP in 2021 at around $62,000, a developing economy because the nation has extreme income inequality, a lack of infrastructure, and limited educational opportunities for non-affluent citizens. Examples of countries with developed economies include the United States, Canada, and most of western Europe, including the United Kingdom and France. The Human Development IndexThe UN's Human Development Index (HDI) looks at three standards of living criteria—literacy rates, access to education, and access to health care—and quantifies this data into a standardized figure between zero and one. Most developed countries have HDI figures above 0.8. The United Nations, in its annual HDI rankings, reports that in 2020, Norway had the world's highest HDI at 0.957. The United States ranked 17th at 0.926. The top 10 countries in the HDI index were Norway, Ireland, Switzerland, Hong Kong, Iceland, Germany, Sweden, Australia, Netherlands, and Denmark. Niger had the lowest human development index score at 0.394 out of 189 countries. Developing EconomiesTerms such as "emerging countries," "least-developed countries," and "developing countries" are commonly used to refer to countries that do not enjoy the same level of economic security, industrialization, and growth as developed countries. The term "third-world country" to describe a state is today considered archaic and offensive. The United Nations Conference on Trade and Development notes that the world's least-developed countries are "deemed highly disadvantaged in their development process—many of them for geographical reasons—and (face) more than other countries the risk of failing to come out of poverty." It is often claimed by proponents of globalization, that globalization is helping to lift developing economies out of poverty and onto a path of improved standards of living, higher wages, and use of modern technology. These benefits have primarily been witnessed in the Asia-Pacific region. Though globalization has not taken root in all developing economies, it has shown to improve the economies in the ones that it has. That being said, globalization does come with drawbacks as well that need to be assessed when foreign investments flow into a developing economy. How do you classify countries based on income?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.
What are the 3 classifications of countries?Based on GNI, countries are classified into three main groups. These are high-income (developed) countries, newly emerging economies (emerging) and low-income countries (developing). For 2022, low-income economies are defined by the World Bank as those with a GNI per capita of $1,045 or less in 2020.
What classifies a country as high income?A high-income economy is defined by the World Bank as a nation with a gross national income per capita of US$12,696 or more in 2020, calculated using the Atlas method. While the term "high-income" is often used interchangeably with "First World" and "developed country," the technical definitions of these terms differ.
How are countries classified as high middle or low income?For the current 2016 fiscal year, low-income economies are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of $1,045 or less in 2014; middle-income economies are those with a GNI per capita of more than $1,045 but less than $12,736; high-income economies are those with a GNI per ...
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