‘Middle income’ status is too broad to be useful

by Ian Townsend


Middle income status is too broad to be useful

 

The sheer range of ‘middle income countries’ (MICs) as defined by the World Bank makes this ‘analytical category’ a poor basis for resource allocation decisions. The divergent paths of China and India since the early 1990s show just how varied MICs are.

The World Bank released their annual GNI per capita data on 1 July 2014. This revises the thresholds for the Bank’s widely used income groups, and updates country average income data to 2013.

China’s rapid average income growth saw this reach US$6,560 in 2013, up almost 15% on 2012 in US dollar terms, and about half-way to ‘high income’ threshold (set at US$12,745 in 2013). In contrast, India’s average income reached US$1,570, which was 1.3% higher than in the previous year and little more than a tenth of the way to the ‘high income’ threshold.

The 2013 data also shows that two countries (barely) crossed the US$1,046 threshold to be classified as lower middle income in 2013: the Kyrgz Republic, with average income per person of US$1,200 and South Sudan, just behind Sudan at US$1,120. These were the only moves between the World Bank’s income groups in 2013.

An estimated 5% of peple in the Kyrgz Republic were living in extreme poverty in 2011 (no data is available for South Sudan). Several countries that are nearing MIC income levels – Chad  Tajikistan and Cambodia, followed by Kenya (with a major upward GDP revision expected in September 2014) and Bangladesh – all suffer from continued extreme poverty.

This suggests that ‘MIC’ status is a poor basis for making decisions about allocating aid and other resources. Even the supposedly ‘rich’ developing countries like China suffer from extreme poverty, which will also need to be addressed if the 2030 goal of ending poverty is to be met.

You can download the data in Excel and CSV format.

Notes

GNI per capita in US dollars adjusted using the World Bank’s ‘Atlas’ method, for details see World Bank website

Written by Ian Townsend and Jordan Beecher.

Source

Development Initiatives using the World Bank’s historical GNI per capita spreadsheet and 2013 GNI per capita PDF