Question

What is the main Criterion used by World Bank in classifying different countries what are the limitations of the Criterion. If any ?In what respects is the Criterion used by the UNDPfor measuring development different from the end of used by the World Bank?

Answer 1

The World Development Report, 2012, brought out by the World Bank has given the following criterion in classifying countries-Rich or High income countries- Countries with the per capita income of US $1216 per annum and above in 2012, are called rich countries.Poor or Low income countries- The countries with the per capita income of US $1035 or less, are called low income countries.India comes in the category of low middle income countries because its per capita income in 2012 was just US $1530 per annum. The rich countries, excluding countries of Middle east and other small countries, are generally called the developed countries.Limitations-1. It covers only the economic aspect ignoring peace, health, environment, education, longevity ,etc.2.This method does not give information regarding the distribution of income.
The World Bank uses the Per capita Income as a method to measure the development of a country.Under World Bank, developed countries are those whose per capita income is $  12616 per annum or more and less developed countries are those whose per capita income is $ 1035 or less per annum.
The UNDP publishes Human Development Report that measures the development of a country in terms of literacy, health and per capita income.According to that the countries are given Human Development Index (HDI )ranks.

Answer 2

Per Capita Income is the main criterion used by the World Bank in classifying different countries. The limitation of this criterion are:

Per capita income is useful for comparison but it doesn't show the distribution of income.

It also ignores other factors such as infant mortality rate, literacy level, healthcare, etc.

Per capita income does not give the true picture as there is a huge population which does not earn at all like children and the senior citizens but they are also included while calculating per capita income. National income rises but its distribution make the rich richer and the poor poorer.

World bank only uses per capita income for measuring development while UNDP uses many other factors like infant mortality, healthcare facility education level which help in improving the quality of life and helps in making the citizens more productive. As per HDI- 2014, India's rank is 135. On the other hand, the World Bank uses per capita income as the only criterion for measuring development and classifying the countries as rich and poor. Per capita income is useful for comparison, it does not tell us how income is distributed.