— Ch. 1 · Defining Development Classifications —
Developing country.
~8 min read · Ch. 1 of 6
The World Bank classifies the world's economies into four groups based on gross national income per capita calculated using the Atlas method. This calculation resets each year on the 1st of July to reflect current economic conditions. For the 2022 fiscal year, a low-income country is defined as one with a GNI per capita less than 1,045 in current US dollars. A lower middle-income country has a GNI per capita between 1,046 and 4,095 in current US dollars. An upper middle-income country falls between 4,096 and 12,695 in current US dollars. High-income countries are those with a GNI per capita of more than 12,696 in current US dollars. The three groups that are not high income are collectively referred to as low and middle-income countries or LMICs. There is no established convention for defining a developing country across all international organizations. Some economists argue that the binary labeling of countries is neither descriptive nor explanatory. In 2015, the World Bank declared that the developing developed world categorization had become less relevant due to worldwide improvements in indices such as child mortality rates. The organization decided to phase out the use of that descriptor in its reports. Instead, their data now includes aggregations for regions and income groups rather than the broad term developing world. The International Monetary Fund focuses solely on financial integration and stability instead of overall social development levels. This IMF terminology uses markets economies and not countries when classifying nations. The adoption of the Euro earned several European countries an immediate upgrade by the IMF to being a developed economy based on larger financial integration without considering other factors.