Question

What main criterion is used by the world bank in classifying different countries? What are the limitations of the above criterion, if any?

Answer 1

Per Capita Income is the main criterion used by the World Bank in classifying different countries. Economists agree that income is not the only factor to improve the quality of life. There are many other factors which affect the development, e.g. infant mortality rate, literacy level, healthcare, etc. Hence, it can be said that the criterion used by the World Bank has its own limitations.

Answer 2

Explanation:

Per Capita income of the country is the main criterion used by the World Bank in classifying different countries.

The two main limitations of this criterion are –

a. It takes into the account only the economic aspects and ignores some crucial factors such as – literacy rate, infant mortality rate, etc. which are among the most important indicators of the development.

b. This method is unable to provide the distribution of different levels of income.