IB Geography 1.1.2 Global Patterns and Classification of Economic Development Notes

Development Is Classified by Income, and the Categories Are Redrawn Every Year

1. The World Bank sorts every economy into four income groups using gross national income (GNI) per capita.
   1. GNI per capita is the total income earned by a country's residents, including income from abroad, divided by its population.
   2. It is converted to US dollars by the Atlas method, which averages exchange rates over three years and adjusts for inflation differences, so a currency shock does not by itself move a country between groups.
2. The thresholds are revised every July, so the group a country sits in can change from one year to the next.
3. For World Bank fiscal year 2027, based on 2025 GNI per capita, the four groups are set as follows.
   1. Low-income: $1,175 or less.
   2. Lower-middle-income: $1,176 to $4,635.
   3. Upper-middle-income: $4,636 to $14,375.
   4. High-income: above $14,375, with no upper limit.

Low- and Middle-Income Countries Hold the Great Majority of People

1. Low-income countries
   1. Most people live in rural areas rather than in towns and cities.
   2. Smallholder and subsistence agriculture employs a large share of the workforce.
   3. Fertility is high, so populations are young and growing quickly.
   4. In Niger, roughly four in five people live in rural areas.
   5. Its fertility rate is above six births per woman, the highest of any country.
   6. Low income does not mean thinly populated, since Rwanda and Burundi are both low-income and among the most densely settled countries in Africa.
2. Middle-income countries and emerging economies
   1. World Bank aggregates for 2024 place 73.4% of the world's population in lower-middle-income and upper-middle-income economies. These categories classify national GNI per capita, so they do not show inequality within countries or quality of life.
   2. It is split into lower-middle and upper-middle because a country at $1,200 and one at $14,000 have little in common.
   3. Industrial and service growth concentrates jobs in cities, so this group is urbanizing fastest.
   4. Demographic direction varies widely inside the group, because China's population is now falling while Nigeria's is growing quickly.
   5. Emerging economies are the fast-growing part of this group, with large domestic markets and deepening integration into world trade.
   6. There is no single official list, because the IMF and index providers such as MSCI each publish their own, though China, India, Brazil, Indonesia and Türkiye appear on most of them.
   7. Inequality within these countries is often wider than in either of the other groups.

High-Income Countries Hold About One Person in Seven

1. In 2024, 17.4% of the world's population lived in high-income economies.
2. Most of those people already live in urban areas, so urbanization has largely run its course.
3. Fertility sits below replacement level across most of the group, so populations are ageing and several are shrinking.
4. Membership of the group changes, because Ireland and South Korea both crossed the high-income threshold within living memory.

Other Classifications Measure What Income Alone Misses

1. Income groups are the World Bank's system.
2. Other classifications cut the same world along different lines, and you will meet several of them in textbooks and data sources.
3. Newly industrialized countries
   1. The first wave, South Korea, Singapore, Hong Kong and Taiwan, industrialized rapidly from the 1960s and all are now high-income.
   2. A later wave including Malaysia and Thailand industrialized from the 1980s and remains upper-middle-income.
4. Named country groupings
   1. BRICS began as an investment acronym for Brazil, Russia, India, China and South Africa.
   2. It has since become an intergovernmental grouping with its own development bank, and has admitted further members including Egypt, Ethiopia, Iran, Indonesia and the United Arab Emirates.
   3. MINT, covering Mexico, Indonesia, Nigeria and Türkiye, remains an investor label rather than an organization.
5. Least developed countries
   1. This is a formal UN category of 44 countries facing the most severe structural obstacles to development.
   2. Countries qualify on three criteria: income, human assets, and the Economic and Environmental Vulnerability Index.
   3. Because two of the three criteria are not monetary, the list is not simply the poorest countries by income.
6. Resource-dependent high-income economies
   1. Saudi Arabia and the United Arab Emirates reached high-income status largely through oil and gas revenue.
   2. A high average income here says little about how diversified the economy is or how the revenue is shared.
7. MEDC and LEDC
   1. This older two-way split is still common in textbooks and in older mark schemes.
   2. It cannot describe a world where most people live in the middle-income group, which is why the income-group terms are preferred.

The Income Groups Cluster Geographically Rather than Scattering

1. Low-income countries are concentrated in sub-Saharan Africa, with a small number in South and Central Asia.
2. High-income countries cluster in North America, Western and Northern Europe, East Asia, Oceania and the Gulf.
3. Middle-income countries span Latin America, North Africa, South and Southeast Asia and much of Eastern Europe.
4. The clustering is regional because neighboring economies trade most heavily with each other, and because they often share histories of colonization, industrialization and investment.
   1. Regional clustering is a pattern rather than a rule, since Chile, Uruguay and Japan all sit in higher groups than their neighbors.