For comparing countries, their income is considered to be one of the most important attributes. Countries with higher income are more developed than others with less income. This is based on the understanding that more income means more of all things that human beings need. Whatever people like, and should have, they will be able to get with greater income. So, greater income itself is considered to be one important goal. Now, what is the income of a country? Intuitively, the income of the country is the income of all the residents of the country. This gives us the total income of the country. However, for comparison between countries, total income is not such an useful measure. Since, countries have different populations, comparing total income will not tell us what an average person is likely to earn. Are people in one country better off than others in a different country? Hence, we compare the average income which is the total income of the country divided by its total population. The average income is also called per capita income. In World Development Reports, brought out by the World Bank, this criterion is used in classifying countries. Countries with per capita income of US$\$$ 49,300 per annum and above in 2019, are called high income or rich countries and those with per capita income of US$\$$ 2500 or less are called low-income countries. The rich countries, excluding countries ofMiddle East and certain other small countries are generally called developed countries.
Q.1. Explain the significance of per capita Income.
Q.2. What are the classifications of countries based on per capita income, and which entity is responsible for determining these classifications?"
A-2 The courtiers are classified into “High income or Rich countries and low income countries based on their per capita Income. If it is US $ 49,300 per annum they will be classified as rich country and if the per capita income is US$ 2500 per annum it will be called a poor country. World Bank determines this classification.