question_answer

What is the main criterion used by the World Bank in classifying different      countries as rich and poor countries? What are the limitations of this criterion?

Answer:

World bank classifies the whole globe as a rich or poor country. World bank works on the basis of average income or per capita income of the particular country to be declared as poor or rich. Any country having more than or equal to 45,3000 per annum in the year 2004 is classified as a rich country and less than or equal to 37000 per annum is called a low-income country or a poor country.

Limitations:

(i) They use per capita income to classify but it hides disparities like two countries have identical average income but one country may have equitable distribution. In other country, it may be possible that most of citizens are poor while very few of them are extremely rich.

(ii) More income cannot ensure a good quality of life. For example freedom, equality and equal opportunities.