Development-Source Based Questions
Read the source given below and answer the questions that follow:
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 of Middle East and certain other small countries
are generally called developed countries.
1. Explain the significance of per capita Income.
2. What are the classifications of countries based on per capita income, and
which entity is responsible for determining these classifications?