World Bank follows the following criterion to categories rich countries and low-income countries.
(i) Average Income/Per Captia Income. It is used as a criterion because it gives some idea about the rising standard of living of people.
(ii) Rich Countries. Countries which had per capita income of $10,066 per annum and above in 2004 (According to World Development Report 2006).
(iii) Low-income countries. Countries which have per capita income of $825 or less in 2004 (According to WDR 2006).
(iv) Limitation of this criterion is that average income or per capita income is not the only factor important for development. This factor hides the other important factor—‘Distribution of Income’ which also affects development. Higher average income along with equitable distribution of income is considered favourable for development.
(v) Criterion by UNDP for measuring development: It calculates human Development index which is the simple average of three indices—Longevity, Knowledge/Educational attainment and per capita real GDP. Different countries are rated between 0 to 1.