Bank to review its country classifications

6 December 2012

In response to China and India’s graduation from low-income country (LIC) to middle-income country (MIC) status, the Bank has decided to review its country classification system (see Update 78). Though China and India’s national income may have risen, absolute poverty still persists meaning that the majority of the world’s poor now live in MICs. According to the Bank lead’s poverty researcher Martin Ravillion, arbitrarily picked graduation thresholds “[have] been essentially fixed in real terms for over 40 years,” and do not measure the capacity of such countries to provide for their poor. The review will address whether per capita income, poverty rates or capacity measures should be the basis for classification, the level at which thresholds should be set and how frequently they should be updated.