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 and technologically, and the quality of life people typically have.

Quality of life covers the range of human needs that should be met alongside income growth. When exploring quality of life, we consider:

social factors, such as family/friends, education and health
physical factors, such as diet/nutrition, water supply, climate and environmental quality/hazards
psychological factors, such as happiness, security and freedom.

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.

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 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, further calculations must be made to compare. This involves dividing the GNI by the country’s population to reach the GNI per capita. Then, the value is converted into US dollars to allow comparisons 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 by the World Bank. These are high-income (developed) countries, newly emerging economies (emerging) and low-income countries (developing).

Low Income Countries (LICs)

The World Bank identifies 26 nations as having low average incomes, with a Gross National Income (GNI) per capita of US$1,135 or less, according to 2022 figures. In these countries, agriculture is an important sector in their economies.

Newley Emerging Economies (NEEs)

Around 80 countries are witnessing an acceleration in economic growth, largely attributed to the swift expansion of manufacturing and industrial activities. These Newly Emerging Economies (NEEs) attract investments from Transnational Corporations (TNCs), including groups such as BRICS and MINTS. NEEs align with the World Bank’s classification of ‘middle-income’ countries. The rise in the number of NEEs over recent years can be connected to the growth of globalisation.

High Income Countries (HICs)

The World Bank categorises 83 countries as having high average incomes, with a GNI per capita exceeding US$13,846, based on 2022 data. Approximately half of these are often referred to as ‘developed’ countries, where the shift towards office-based work has led to the emergence of post-industrial economies. Additionally, this category includes roughly 40 smaller high-income nations, each with populations of about 1 million or fewer, such as Bahrain, Qatar, Liechtenstein, and the Cayman Islands.

For 2024, low-income economies are defined by the World Bank as those with a GNI per capita (in 2022) of $1,135 or less. There are 26 countries classified as LICs. These are shown below.