Economic characteristics: classifying countries

Types of characteristics

Economic - relates to the finance and economic productivity in a country

• Poverty levels, range of industires, global trade opportunities, average incomes, international debt levels

Social relates to the social environment

• levels of gender equality, birth rates and population growth, levels of employment, levels of education, social security systems, health systems, access to technology, legal systems

Environmental relates to the physical environment

• water and sanitation, food security levels, housing, infrastructure, levels of carbon dioxide.

Economic characteristics

• Poverty

• Range of industries

• Global trade

• Average incomes

Poverty (Low. Medium, high income countries)

"‘Poverty’ is a term commonly used to describe the lack of access to resources, often as the result of a lack of access to money.

• There are many reasonf for poverty such as opportunties for global trade and avergae incomes

The level of poverty can be expressed as the proportion of those with income of less than PPP $2.15 per day, known as extreme poverty

PPP refers to ‘purchasing power parity’, which provides a way to compare countries that have different currencies and costs of living. PPP takes a range of factors into account, such as average income and the cost of living, to provide a standard comparable currency. PPP is often expressed in US dollars (US$) or as international dollars (PPP$), which is a theoretical currency.

Range of industries

• High-income countries often have a wide range of industries, including mining, processing, manufacturing, education, health care, scientific research and technology. Low-income countries, on the other hand, often have a limited range of industries, usually centred on farming and primary production.

• According to the World Bank, in 2021, around 3 per cent of the workforce in high-income countries worked in agriculture, compared to almost one-third in middle-income countries and up to 70 per cent and higher in many low-income countries. This reduces the ability of low-income countries to trade on the global market, because they may not be able to generate goods that other countries require.

• Middle-income countries often reflect aspects of both high- and low-income countries in relation to trade and many are in a transition period, experiencing increasing trade opportunities and growing economies.

Having a range of industries increases the probability that at least some of these industries will experience positive production and trade trends at any one time.

If a country’s industries revolve around one resource (such as food production), events such as drought can have a significant impact on this industry. If there are no other industries to take their place on the global market, trade can be affected.

Global trade

Having a range of industries increases the probability that at least some of these industries will experience positive production and trade trends at any one time.

If a country’s industries revolve around one resource (such as food production), events such as drought can have a significant impact on this industry. If there are no other industries to take their place on the global market, trade can be affected.

• it is also affected by infrastructure (such as roads, port and airports) and knowledge and experience, which can assist in buying from and selling to toher countries around the world.

High-income countries generally have access to these resources, so they can transport goods from the place of production to an overseas destination, and benefit most from trading opportunities as a result.

• Many middle-income countries are in the process of building infrastructure and developing trading links around the world.

• Low-income countries often lack the infrastructure knowledge and production capabilities to produce a range of goods and services to trade on a global scale. This prevents the economies of low-income countries from growing and contributes to the low average incomes they experience.

Average Incomes

Measured by both GNI and GDP

Gross National Income (GNI) per capita is the measure used to categorise countries according to the income groupings used by the World Bank. As a result, GNI per capita increases from low- to middle-income and from middle- to high-income countries.

• GNI takes into account the income earned by foregin citizens or the income earned by citizens working in other countries

• GNI per capita is being used more as an accurate indicator of the average income of a country.

GNi per capita is a measure of average income, it does not show how income is distrbuted, therefore ignore income ineqalities within a country.