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Country Diversity

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Country Diversity - Feature Photo

The World Bank classifies economies by gross national income (GNI) per capita. Based on its GNI per capita, every economy is classified as low income, middle income (subdivided into lower middle and upper middle), or high income. Other analytical groups based on geographic regions are also used.

Low Income Countries

Low income countries are the world's poorest economies, with annual gross national incomes (GNI) of less than $1,005 per person (in 2007). Because of the degree and extent of their poverty, low-income countries receive financial assistance on "concessional terms" from the World Bank through the International Development Association (IDA). This means that IDA credits have no or very little interest charge and repayments are stretched over 35 to 40 years, including a 10-year grace period. IDA also provides grants to countries at risk of debt distress.

IDA-financed operations support broad-based growth, job creation and better living conditions for the poor. Projects include: Investment in infrastructure, agriculture and rural development

  • Adoption of sustainable environmental practices
  • Investment in people, in education and health, especially in the struggle against HIV/AIDS, malaria and TB
  • Expansion of their capacity to provide basic services and ensure accountability for public resources
  • Recovery from civil strife, armed conflict and natural disaster
  • Promotion of trade and regional integration

Middle Income Countries

A third of the world's poor, defined as people who earn less than $2 per day, live in middle-income countries. Unlike the widespread poverty one finds in low-income countries, absolute poverty in middle-income countries tends to be more localized in particular regions or among specific ethnic groups. Middle-income countries are generally creditworthy and have access to financial markets. These countries borrow from the World Bank's Group International Bank for Reconstruction and Development. (Low-income countries like India and Pakistan which also borrow from IBRD are known by the Bank as "blend" countries.)

Middle-income countries are increasingly important in terms of providing global public goods such as clean energy, trade integration, environmental protection, international financial stability, and the fight against communicable diseases. Many of these countries face constraints in mobilizing the funds needed to invest in infrastructure, health, education, and the reform of policies and institutions essential to improving the investment climate. Middle-income countries are also vulnerable to economic shocks, which can have a major impact on those living in poverty.

Finding successful approaches to support the development objectives of middle-income countries is high on the World Bank's global development agenda.

Fragile and Conflict-Affected States

Fragile States contain a significant number of the world's poor. Their state policies and institutions are weak, and the countries often face risks of conflict and political instability. They also share a range of bleak economic indicators-from GDP per capita levels that are typically half that of other low-income countries to child mortality rates that are twice as high. Weak state policies and institutions undermine the country's capacity to deliver services to citizens, control corruption, or provide for sufficient voice and accountability. Also, fragile states can and do create negative spillovers for their neighbors, such as social and political instability caused by refugee flows.

Small States

Small states are not easily defined - some are quite wealthy, some very poor. Some are islands or groups of islands. Others are land locked. All have populations of 1.5 million or less. Small states are especially vulnerable to external events, including natural disasters. Many small states suffer from limited capacity in the public and private sectors. Others are facing an uncertain and difficult economic transition to a changing world trade regime.

Several characteristics define the development challenges and vulnerabilities that many small states face: remoteness and isolation; openness and vulnerability to world markets; susceptibility to natural disasters and environmental change; limited variety in what they produce and export; slightly higher poverty levels; insufficient institutional capacity; income volatility; and less access to external capital.