World Bank updates its country classification by GNI per capita

Since 2012 the World Bank updated its classification of countries by gross national income per capita.
The World Bank distinguishes four groups of countries by average per capita national income:

- Low-Income economies in which GNI per capita was less than $1035 in 2012 - 36 such countries;
- Lower-middle-income economies in which GNI per capita varied within a range of $1036-4085 in 2012 - 48 such countries;
- Upper-middle-income economies in which GNI per capita varied within a range of $4086 and $12615 - a total of 55 such countries;
- High-income economies in which GNI per capita exceeded $12616 in 2012 - 75 countries.

The World Bank distinguishes OECD member countries (31) among high-income economies.

 

Russia was upgraded from the category of upper-middle-income economies to high-income economies in response to the recent changes. According to the World Bank, average GNI per capita in the Russian Federation amounted to $12700 in 2012, exceeding a threshold of $12615. The World Bank evaluated $10810 for Russia in 2011, a growth of more than 17% during a year. However, Russia's GNI expressed in USD at a current exchange rate increased just 5%. The difference can be explained by a special methodology (World Bank's Atlas Method) used for correcting GNI estimates worldwide. The World Bank receives source macrodata from national statistics services (the Federal State Statistics Service in Russia). The WB's Method recognizes values of average annual exchange rates over the past three years, adjusted for the difference between GDP deflator of a country and the five largest economies. The adjustment for Russia reflects strengthening of the ruble in real terms. The ruble gained more than 1/3 in 2012 against 2009 which the World Bank recognized to evaluate the national income in 2011. Therefore, a drastic upgrading of the Russian economy by the World Bank is basically explained by the base effect: the 2009 crisis becomes a thing of the past.

 

In addition, GNI reflects the situation not only with personal income, but also the economy at large. For example, according to Gaidar Institute's Center for Structural Surveys, personal income accounted for about 65% of GNI in 2012.

 

Having been upgraded by the World Bank, means that Russia has been out of the developing countries category and met another, not yet the principal, requirement for the accession to the OECD. Apart from the accession to the WTO after about 20 years of negotiations, Russia is to join a few conventions and accords, as well as relieve the administrative load on businesses and achieve certain progress in combating corruption. By meeting the OECD accession requirements, Russia would benefit as much as from the accession itself which would simply be a recognition of a certain level of country's development.

 


Fig. Gross national income per capita in Russia, according to the World Bank's estimates (the Atlas method), US dollars.

 

M. Y. Khromov, a leading expert of the Center for Structural Surveys

 

 

 

 

Friday, 05.07.2013