Generic indicator sets back fight against poverty
The use of GNI per capita for income classification can prevent assistance from reaching where it is needed most
Someone asked a thought-provoking question at a meeting I attended this week: “How can Sandton and Alexandra both be upper middle income? If the goal of a development loan is to alleviate poverty, how do both of these areas get the same financing terms and levels of development assistance?”
In the development sphere, financing terms and development assistance are largely tied to a single indicator: gross national income (GNI) per capita. Countries are grouped into an income category, which is based on income per capita. The World Bank has four annual income categories for world economies — low (<$1,026), lower-middle ($1,026-$3,995), upper-middle ($3,996-$12,375) and high (>$12,375) — and many institutions rely on these classifications...
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