Current Affairs
World Bank released revised classification of world’s economies based on Gross National Income
The World Bank on 1 July 2015 released the annual revised classification of the world’s economies based on estimates of gross national income (GNI) per capita for 2014. The GNI calculations are based on World Bank Atlas method. The revision in the classification was done on the basis of the 2015 edition of World Development Indicators (WDI) report released on 15 April 2015 by the bank.
Takeaways from the revised classification of world’s economies
• While, in 1994, 56.1 percent of the world’s population or 3.1 billion people lived in the 64 low-income countries, in 2014, this was down to 8.5 percent or 613 million people, living in 31 countries.
• Bangladesh, Kenya, Myanmar and Tajikistan moved from the low income group to the lower-middle income group. While low-income economies are defined as those with a GNI per capita of 1045 US dollars or less, members of lower-middle income group have between 1045 US dollars and 4125 US dollars.
• Mongolia and Paraguay moved from the lower middle-income status to upper middle-income, a group with yearly income levels of 4126 US dollars to 12735 dollars.
• Argentina, Hungary, Seychelles and Venezuela have moved from the upper middle-income category to high income, with average per capita income levels of 12736 US dollars or more.
• In contrast to the above 10 countries that improved their status, South Sudan has fallen out of the lower middle-income classification back into low-income status due to civil wars and sluggish in the oil industry.
• Maldives and Mongolia were the highest movers in the rankings – up 13 and 8 places, respectively.
• Oman and Timor-Leste fell most from their 2013 ranking – down 15 places for both.
• People living in low-income countries continue to fall behind those in the upper per capita GNI brackets, while they earn and consume significantly less than much of the world’s population.
• Malawi has the world’s lowest reported GNI per capita at 250 US dollars, while Monaco has the highest, at more than 100000 US dollars – more than 400 times more per person on average than Malawi.India’s position as per the revised classification
• Though India’s average per capital GNI reached 1610 US dollars or around 101430 rupees, it continues to be in the lower middle income category.
• With the addition of one trillion US dollars during the past seven years, India’s GDP reached 2 trillion US dollar mark in 2014. In 2013 it was 1.861 trillion US dollars.
Usefulness of revised classification
The World Bank as a group consists of International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD).
For the sake of determining lending eligibility of countries they are divided into IDA, IBRD, and Blend countries based on the operational policies of the World Bank including the World Development Indicators (WDI) report.
IDA countries are those with low per capita incomes that lack the financial ability to borrow from the IBRD. Blend countries are eligible for IDA loans but are also eligible for IBRD loans because they are financially creditworthy.