Classifying Poor and Rich Countries 1

How to classify countries?

As you have seen in the previous unit of this lesson, poverty is a phenomenon that affects people's lives. However, as the animation on the previous page illustrated, there are also tremendous differences between countries.

Click on the animation in the right-hand column and look at the differences that exist between people living in different countries but also within the same country:

While different classifications of countries according to their wealth do exist, each one has its limitations. Rather than talking of rich or poor countries, people often refer to

• low-income or developing countries (sometimes also referred to as the South, Third World or non-industrialised countries ), where the GNP is low (thresholds are being fixed on a yearly basis),
• and to high-income or developed countries (sometimes referred to as the North, First World and industrialised countries), where the GNP is higher.

All of these classifications have their strengths and flaws. Moreover, the definitions tend to change, which makes comparisons difficult. The distinction between low and high-income countries has the advantage of being based on quantifiable data (i.e. the Gross National Product (GNP)). However, this classification only focuses on the financial aspect of poverty and moreover says very little about the actual distribution of income within a country.

Focussing on development instead gives a classification that takes into account a complex and multidimensional process and encompasses different aspects of poverty. However, it is difficult to find clear and quantifiable indicators that cover all aspects of what is understood by development. Moreover, the very term "development" is contested since it has an unavoidable normative aspect that goes beyond poverty. It is still often considered to be a process involving stages countries have to go through in order to reach the level of already developed countries and presupposes that developed countries have reached a stable situation (for more discussion on the concept of development, take a look at the GLOPP lesson "Development Theories").

Take a look at the World Bank's list of developing countries by clicking on the link in the right-hand column and further by clicking on there on "view all groups":