Simone Lawson
The World Bank classifies the world's economies into four groups based on gross national income (GNI) per capita: high-income, upper-middle-income, lower-middle-income, and low-income countries. These classifications are adjusted annually in response to shifts in the global economy. Low-income economies are defined as those with a GNI per capita of $1,135 or less in 2022, while lower-middle-income economies had a GNI per capita between $1,136 and $4,465. Middle-income countries (MICs) are essential to global economic growth and development, contributing to increased international trade, sustainable energy development, improved food and water security, and reduced border conflicts. MICs represent about one-third of global GDP and are home to 75% of the world's population, including 62% of the world's poor. While the term developing country is controversial and considered outdated by some, it generally refers to countries with lower levels of access to basic amenities, healthcare, and infrastructure, and is often associated with low- and middle-income countries.
| Characteristics | Values |
|---|---|
| Definition | Low and middle-income countries (LMICs) are the three groups that are not "high income". |
| Classification | The World Bank classifies countries into four groups based on gross national income per capita (GNI) calculated using the Atlas method and reset each year on 1 July. |
| GNI per capita | Low-income economies: $1,085 or less (2021), $1,135 or less (2022) |
| Lower-middle-income economies: $1,086 to $4,255 (2021), $1,136 to $4,465 (2022) | |
| Upper-middle-income economies: $4,466 to $13,845 (2022) | |
| Development | LMICs are often referred to as developing countries, which tend to have lower levels of access to safe drinking water, sanitation, and hygiene, and higher levels of pollution and infectious diseases. |
| LMICs often have lower life expectancies and higher mortality rates, reflecting lower income levels and poorer public health. | |
| LMICs tend to have lower median ages than developed countries. |
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What You'll Learn
Gross National Income (GNI) per capita
The World Bank classifies the world's economies into four groups based on gross national income (GNI) per capita, calculated using the Atlas method and reset each year on 1 July. The four groups are: high-income, upper-middle-income, lower-middle-income, and low-income countries. Upper-middle-income and lower-middle-income countries are often referred to collectively as middle-income countries (MICs).
The World Bank defines these groups according to GNI per capita thresholds. For the 2024 fiscal year, low-income economies are defined as those with a GNI per capita of $1,135 or less in 2022. Lower-middle-income economies are those with a GNI per capita between $1,136 and $4,465, while upper-middle-income economies are those with a GNI per capita between $4,466 and $13,845. Economies with a GNI per capita of $13,846 or more are considered high-income. These thresholds are adjusted by the World Bank each July in response to shifts in the global economy. For example, in 2021, the threshold for low-income economies was a GNI per capita of up to $1,085.
The terms low- and middle-income country (LMIC) and newly emerging economy (NEE) are often used interchangeably, but they refer specifically to the economy of the countries, not other factors. MICs are essential to global economic growth, and development in these countries can lead to increased international trade, greater sustainable energy development, improved food and water security, and reduced border conflicts.
It is important to note that there is no universal agreement on the classification of countries as developing or developed. The World Bank declared in 2015 that the "developing/developed world categorization" had become less relevant and that they would phase out its use. Instead, their reports present data aggregations for regions and income groups. Developing countries are typically defined as having a less-developed industrial base and a lower Human Development Index (HDI) than developed countries. They often face challenges such as limited access to safe drinking water, energy poverty, higher levels of pollution, higher disease burden, and poorer infrastructure.
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Human Development Index (HDI)
The Human Development Index (HDI) is a tool used by the United Nations to assess a country's level of human development. It is a composite index that takes into account various indicators such as life expectancy, education, and per capita income. The HDI is a way to measure and rank countries based on their level of human development, with countries receiving a score between 0 and 1. A higher HDI score indicates a higher level of human development.
The HDI is often used to classify countries as developing or developed. Developing countries tend to have lower HDI scores, reflecting their lower levels of access to basic services such as safe drinking water, sanitation, and healthcare. They also often face challenges such as higher rates of infectious diseases, maternal and child mortality, and lower life expectancies. Additionally, developing countries are expected to be more vulnerable to the effects of climate change due to their high climate vulnerability or low climate resilience.
Middle-income countries (MICs), which include lower-middle-income and upper-middle-income economies, often fall into the category of developing countries when evaluated using the HDI. These countries are essential for global economic growth, and their development can bring about benefits such as increased international trade and improved food and water security. MICs represent about one-third of global GDP and are home to 75% of the world's population, including 62% of the world's poor.
The World Bank, an organization dedicated to helping countries overcome poverty, uses a classification system based on gross national income (GNI) per capita to categorize countries into lending groups. For the 2024 fiscal year, the World Bank defines low-income economies as those with a GNI per capita of $1,135 or less in 2022. Lower-middle-income economies range from $1,136 to $4,465, while upper-middle-income economies range from $4,466 to $13,845. High-income economies have a GNI per capita of $13,846 or more. These classifications are adjusted annually in response to shifts in the global economy.
While the HDI provides a comprehensive overview of human development, it is important to recognize that development is a complex and multifaceted concept. The definition of a developing country and the specific countries that fall into this category are not universally agreed upon. The World Bank, for instance, has moved away from the "developing/developed world categorization," recognizing its limitations and opting to focus on data aggregations for regions and income groups. Nonetheless, the HDI remains a valuable tool for understanding the relative levels of human development among nations and the challenges and opportunities unique to each developmental context.
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Access to safe drinking water
Low- and middle-income countries (LMICs) are those that fall into the three categories that are not "high income". The World Bank classifies countries into four groups based on gross national income (GNI) per capita, calculated using the Atlas method and reset each year on 1 July. For the 2024 fiscal year, low-income economies are defined as those with a GNI per capita of $1,135 or less in 2022. Lower-middle-income economies are those with a GNI per capita between $1,136 and $4,465, while upper-middle-income economies range from $4,466 to $13,845.
LMICs are essential to global economic growth, and development in these countries can lead to increased international trade, greater sustainable energy development, improved food and water security, and a reduction in border conflicts.
To address the issue of access to safe drinking water in LMICs, various interventions can be implemented. These may include:
- Infrastructure development: Investing in water treatment plants, pipelines, and distribution systems can ensure that safe drinking water is accessible to more people.
- Community-based solutions: Involving local communities in the management and maintenance of water sources, such as community-managed hand pumps or gravity-fed water systems.
- Education and training: Providing education on the importance of safe drinking water, hygiene practices, and proper sanitation can empower individuals to make informed choices and improve their overall health.
- Technology and innovation: Implementing innovative technologies, such as solar-powered water purification systems or mobile water treatment units, can be especially beneficial in remote or rural areas.
- Partnerships and collaboration: Collaborating with local governments, non-governmental organizations, and international agencies can help pool resources and expertise to improve access to safe drinking water.
By implementing these strategies and tailoring them to the specific needs and challenges of each LMIC, significant progress can be made towards ensuring that all individuals have access to this basic human right.
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Energy poverty
Low and middle-income countries (LMICs) are those with a gross national income (GNI) per capita of $13,845 or less, according to the World Bank's 2024 fiscal classification. Lower-middle-income economies are those with a GNI per capita between $1,136 and $4,465, while upper-middle-income economies range from $4,466 to $13,845. LMICs are home to 75% of the world's population and 62% of the world's poor.
In developing countries, women and girls are disproportionately affected by energy poverty. They are often responsible for providing energy for their households, collecting fuel sources like wood, charcoal, or dung, which takes time away from education and leisure. Additionally, the use of biomass fuel for cooking and heating disproportionately affects women and children's health, as they are primarily responsible for domestic tasks and are more vulnerable to indoor air pollution.
There is a growing focus on addressing energy poverty globally. Off-grid renewable energy projects in developing countries, such as those in several African nations, offer a sustainable and affordable alternative to fossil fuels. These projects aim to provide access to reliable and environmentally friendly energy services, improving the quality of life for millions.
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Healthcare access
The World Bank and WHO reported in 2017 that half the world's population lacks access to essential health services, and 100 million people are pushed into extreme poverty by health expenses. This is true even in more affluent regions like Eastern Asia, Latin America, and Europe, where a growing number of people are spending at least 10% of their household budgets on health expenses.
In low-income countries, inequalities in healthcare access are often due to the failure of healthcare services to reach the poor, and inequitable access to health services. This is reflected in the fact that public money for healthcare in low- and middle-income countries tends to be spent on services that wealthy people use more than poorer people. For example, in Uganda, healthcare financing is highly inequitable. Reforms that charge at the point of use also discourage people from seeking healthcare.
In recent years, there has been an increase in the number of people able to obtain some key health services, such as immunizations, family planning, and antiretroviral treatment for HIV. However, progress is uneven, with wide gaps in the availability of services in Sub-Saharan Africa and Southern Asia. In these regions, basic healthcare services are becoming more available, but the lack of financial protection means families are facing financial distress as they pay for these services out of their own pockets.
The growing urban population in LMICs also imposes additional challenges for health systems, with economic burdens and inequities in healthcare utilisation across slum, non-slum, and wealth levels.
Financial incentives can be a means of improving healthcare utilization, as seen in India's Janani Suraksha Yojana program, which increased women's access to services. However, it also had unintended consequences, such as increased fertility rates.
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Frequently asked questions
The World Bank classifies countries into four groups based on gross national income (GNI) per capita: high-income, upper-middle-income, lower-middle-income, and low-income countries. The three groups that are not "high-income" are referred to as "low and middle-income countries" (LMICs).
For the 2024 fiscal year, low-income economies are defined as those with a GNI per capita of $1,135 or less in 2022. Lower-middle-income economies are those with a GNI per capita between $1,136 and $4,465, while upper-middle-income economies range from $4,466 to $13,845.
Yes, the term "Global South" is used by some as an alternative to referring to developing or low and middle-income countries. However, it is important to note that the use of these terms is controversial, as some feel they perpetuate an outdated concept of "us" and "them".
