Low-income countries are those which have the weakest economies when evaluated by the World Bank, an international coalition of countries dedicated to reducing poverty around the world. As part of its work, the World Bank analyzes the economic health of each of the world's countries and territories based upon their gross national income (GNI) per capita. The countries and territories are then divided into four categories, titled World Bank Country Lending Groups, from low income to high income, whose boundaries are adjusted each year to reflect global inflation.
2022-2023 World Bank Country Lending Group guidelines (all values USD):
- Low-income economies — 2021 GNI per capita of up to $1,085
- Lower-middle-income economies — 2021 GNI per capita of $1,086 to $4,255
- Upper-middle-income economies — 2021 GNI per capita of $4,256 to $13,205
- High-income economies — 2021 GNI per capita of $13,206 or more
Countries Classified as Low-Income Countries (2023 World Bank):
Low-income countries are often synonymous with underdeveloped countries, also known as developing countries, emerging markets, or newly industrialized countries. Wealthier countries and/or international aid organizations often give low-income countries financial aid to help boost and support their economic, political, social, and environmental development. This may come in the form of bilateral aid, which is given directly from the donor country to another, or multilateral aid, which is given to international organizations such as World Bank and United Nations agencies such as UNICEF, which distribute aid to developing countries.
As the poorest countries in the world, low-income countries face struggles relating to a struggling or underdeveloped economy, a low human development index (HDI), and reduced quality of life. Issues related to poor economic health include below-average life expectancy, high infant mortality rates, poor educational outcomes, substandard infrastructure, degrading environmental and climate conditions, and inferior healthcare systems. Many low-income countries suffer high rates of malnutrition, as well as illnesses and infections due to lack of clean water, low sanitation levels, and inadequate access to quality medical care.
Gross national income (GNI) explained
GNI per capita is the dollar value of a country's final income, or GNI, divided by its population. A country's GNI is based upon the gross domestic product (GDP), which measures the value of all the goods and services produced within the country's physical territory. However, GNI then adds any profits earned overseas by a country's citizens, and finally subtracts any profits earned within the country's borders by foreign companies or investors (which are therefore contributions to another country's economy). GNI is often used interchangeably with gross national product (GNP), a very similar, but slightly older metric.
The World Bank computes GNI using a specific technique, known as the Atlas method,. The Atlas method enables accurate and stable comparisons by converting each country's GNI into U.S. dollars using official exchange rates carefully designed to accommodate for market fluctuations. Each exchange rate is the average rate for the past three years, adjusted for differences in inflation between the country and the Euro area, Japan, the United Kingdom, and the United States.
GNI may also be computed and displayed using alternate algorithms, such as a purchasing power parity (PPP) model that uses fictional international dollars (INT$). Due to variations in computation methods and the fact that INT$ and USD are different monetary units, the resulting data sets are likely to differ greatly depending upon the method chosen. However, parallel country-to-country differences will likely appear across all data sets.