The rich and the poor: A note on countries’ classification

• Main Author: Gianni Vaggi
• Format: Article
• Language: English
• Published: Associazione Economia civile 2017-03-01
• Series: PSL Quarterly Review
• Subjects: national income; aid; poverty; countries classification; poor countries
• Online Access: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/13886/13644

With respect to the official thresholds of development in terms of GNI per capita, all developing countries have made remarkable progress; between 1987 and 2015 the number of Low Income Countries has decreased from 42 to 31, while that of High Income Countries has increased from 25 to 79. This rosy picture is largely due to the specific way in which the thresholds have been updated. This paper revises the thresholds according to the increase in the world income per capita during those 28 years. The revised thresholds give a less optimistic description of the economic improvements that occurred during these 28 years, but they provide a better classification of the changes in relative income per capita levels. According to the World Bank’s classification, middle-income countries host the majority of the poor. With the methodology proposed in this paper this is still true, but only because India marginally belongs to the LMICs group. The paper discusses the implication of the proposed thresholds for the extreme poverty line, which in 2015 has been updated to 1.90 US$ a day at 2011 Purchasing Power Parity prices.