Major international organizations classify countries by different factors. One criterion that is often used is gross national income (GNI) per capita – the dollar value of a country’s final income in a year, divided by its population
It reflects the average income of a country’s citizens. It also tends to be linked with other indicators that measure the social, economic, and environmental well being of the country and its people.
The latest World Bank’s classification of countries by income group is calculated using the World Bank Atlas method.
According to the World Bank, only Kyrgyzstan and South Sudan experienced a change of classification over the previous year.
Classification by income does not necessarily reflect development status and economies in one group aren’t all experiencing the same level of development. However, another useful way to classify countries is precisely by their development status – whether they are advanced economies or emerging and developing economies. The International Monetary Fund (IMF), among other organizations, uses this system.
The United Nations (UN,) instead, relies on a more complex classification that includes geographic regions as well as such categories as least developed countries (like Afghanistan and Malawi,) landlocked developing countries (e.g., Botswana, Azerbaijan,) small island developing states (e.g., Bahamas, Mauritius,) transition countries (e.g., Belarus, Croatia), developed regions (Japan, Northern America,) and developing regions (Central America, Asia excluding Japan.)
The term “Newly industrialized country” (NIC) is also useful and is applied to countries whose economies have not yet reached “advanced” or “developed” status but have outpaced their developing counterparts. These are countries that are experiencing industrialization and rapid economic growth, such as China, India, Brazil, Malaysia, Philippines and Thailand.
Finally, one system that used to be popular but has fallen out of favor is to divide the world into First-World, Second-World, Third-World and Fourth-World countries. This system was based more on a country’s position in the hierarchy of global power than on its economic status (although the two were often related.) First introduced by the United Nations, its use became widespread during the Cold War. Generally, it grouped countries aligned with the United States and NATO into the First World, the Soviet Union and its allies into the Second World, and non-aligned countries into the Third World. The term Fourth World was sometimes used to refer to extremely poor nations and, at other times, to mean marginal or “stateless” people such as aboriginal cultures within a nation.