How are countries classified?

Countries can be classified as high-income countries (HICs), low-income countries (LICs) and newly emerging economies (NEEs).

How are countries classified?

A country’s level of development is how far it has grown economically, technologically and the quality of life people typically have.

Economic factors include income (how much money people earn), how secure people’s jobs are and standard of living (housing, personal mobility). It also includes physical factors such as diet, nutrition, freshwater supply, climate, environmental quality and hazards.

In terms of quality of life, we consider family/friends, education and health. Also included in this are psychological factors such as people’s level of happiness, security and freedom.

Gross national income (GNI) is a common way of calculating a country’s level of development. GNI shows the average wealth of the citizens of a country. GNI allows comparisons to be made between countries. To calculate GNI you add together the total value of all the goods and services produced by the people within the country to the income earned from investments that its businesses and people have made in other countries.

As countries have different population sizes, a further calculation needs to be made in order to make comparisons. This involves dividing the GNI by the population of the country to arrive at the GNI per capita. Then the value is converted into US dollars to allow comparisons to be made between countries. Finally, each figure must be adjusted based on its income. In low-income countries (LICs), goods and services often cost less than in high-income countries (HICs).

Based on GNI, countries are classified into three main groups. These are high-income (developed) countries, newly emerging economies (emerging) and low-income countries (developing).

For 2022, low-income economies are defined by the World Bank as those with a GNI per capita of $1,045 or less in 2020. There are 27 countries classified as LICs. These are shown below.