Question

Explain the significance of average income for comparing different countries with examples.

Answer 1

1. Helps in Comparing Economic Development: Countries with a higher average income are generally considered more developed than those with lower incomes. For instance, in 2019, nations with a per capita income of US\$ 49,300 or above were categorised as high-income countries, while those earning US\$ 2,500 or less were classified as low-income. India, with a per capita income of about US$ 6,700, falls under the low middle-income category.
2. Used by International Organisations: International bodies such as the World Bank use per capita income as an important indicator in their World Development Reports to group countries into rich, middle-income, and poor categories. It offers a uniform and widely accepted way to compare economic conditions across countries.