When did China become classified as "upper middle income"? What other countries are in the same category? And why should Mahathir get to call his country "poor" relative to China when Malaysia still has GDP per capita higher than China?
> Therefore, In WDI 2016, there is no longer a distinction between developing countries (defined in previous editions as low- and middle-income countries) and developed countries (previously high-income countries). Regional groupings (such as “East Asia”) are now based on geographical coverage rather than a sub-set of countries that were previously referred to as developing. In some occasional cases, where data availability or context have dictated it, we’ve excluded high income from some charts or tables, and we’ve indicated that in the footnotes.
That's when it defined China as "upper middle income." That's based on Gross National Income per capita, as the World Bank calculated it. The thresholds are updated every year and adjusted for inflation.
By the World Bank's definition, China was:
low-income from 87-98 (except 97, when it was lower-middle)
lower-middle from 99-09
upper-middle thereafter
There are 56 upper-middle-income countries right now, out of 218 countries. Brazil, Kazakhstan, Libya, Malaysia, Cuba, Mexico are all upper-middle-income countries by the World Bank's latest definition.
> Why should Mahathir get to call his country "poor" relative to China...?
A simple answer may be aggregates matter when it comes to country-to-country comparisons. A country's companies and government get 'strength' from the aggregate first.
This doesn't make sense at all. So are you saying that India or China is more developed than Singapore because their aggregate "strength" whatever that means is greater than Singapore?
I didn't even use the word 'developed'. Nice try. ;)
I simply mean if you are comparing countries, you need to look at aggregate figures, such as total GDP or market size or population. If one country has lower GDP than another, you could say it is "poor" on that basis, even if per capita GDP (a dis-aggregated figure) were higher.
Taking your example, simply by population size and aggregate GDP and therefore ability to spend on military, India and China ARE stronger than Singapore.
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That's probably the literally trillion dollar question. I talked a bit about it with China scholars. The only thing they kind of agreed on is that it's a big question mark.
China is confident that it can avoid the trap, though. Lou Jiwei, the former finance minister, famously said 2 years ago that China had a 50/50 chance of getting stuck at "middle income." But now as a head of a different government agency he recently said that he's confident that China will become a high-income country in a few years.
That's probably something we should address in another article later.
You don't know whether you are in the middle income trap without the benefit of hindsight. By that time it's too late. If China does move up the value added chain, it could lead to enormous wealth creation globally. For businesses and consumers. That's why I am dissatisfied at the whole America First mentality. It doesn't matter if it's China, India, South Africa or whatever country. Globalization benefits us all and we should support their development.
Has the World Bank considered the question of whether or not GDP per capita is a relevant measure of the need for protectionism?
The four-tier framework seems to address e.g. Bill Gates' comments about grouping China and the DRC, but it would still leave China in a tier below Western nations even though its ability to compete in global markets probably matches or surpasses many of them.
China's status as a developing country is why the Trump administration can't play by WTO rules when it imposes tariffs on China. That's the reason he is outspoken against it. It's pretty astonishing that the United States, which created the multilateral trading institutions have now lost control over them and must resort to unilateral actions.
In theory? Yes. In practice? No. UN is for all practical purposes controlled by the big five with permanent seats in the UNSC. The US' influence over NATO amounts to control. And so on. Most multilateral organizations are controlled by one of the big countries.
I always find the use of per capita GDP as measure of development as a rather strange measure of development. You could have a country with massive oil reserves or similar natural resource wealth that would have a very high per capita GDP but that doesn't necessarily mean that the average person sees any of it. I always thought a better figure is the median wealth per adult, perhaps I'm confused between quality of life and development.
That's true, and a big reason why coal-producing Inner Mongolia is the only non-coastal regions in China that has GDP per capita greater than 10,000USD. (as illustrated in a map in the article)
Yes, quite a number of officials say that it is certainly not a bad province to have a post in, for as long as one ready to endure the weather and boredom.
I think both. One go there to run their projects with plump provincial funds. Kangbashi ghost town is the perfect example of what local officials do while having nothing to do.
Agree, GDP is a terrible metric. However it is useful if you combine it with other measures. Like when you look at GDP and visit a country, you see there is a strong correlation.
One thing I’ve found difficult is comparing the US to e.g. European countries. Houses are much bigger in the US but that is in large part due to much cheaper land and often entirely different build quality. Yet a bigger house and yard naturally translates to a higher quality of life. Yet it is not an entirely fair indicator of economic strength.
Sometimes it could be downright deceptive. There was some right wing economists who deemed Mississippi more wealthty/developed than Sweden by looking as such metrics as house size, car ownerships, microwaves and TVs. Yet it did not caputure well that a lot of these people lived in houses bigger than in Sweden but in terrible condition, poor interior and could not afford important basic stuff like health care.
We actually have some internal problems with those measures in Scandinavia. I live in Denmark and politically we’re made up of 98 municipalities, some are urban, some are rural. Because we share the economic task of welfare, richer municipalities send some of their money to poorer municipalities.
A part of the calculation for this process is build around the size of your bourse, which made good sense 15-20 years ago before urbanization really took off, but makes very little sense today.
It used to be that a country manor was much more expensive than a small downtown apartment. In fact most urban areas with small apartments used to house the lower working class, while country manors used to belong to the upper class.
Today that has switched around. Poor people can literally not afford to live in our largest cities while the most rural manors are now so inexpensive that my three room apartment in our second largest city could by me two-three country manors in the cheapest parts.
We’re changing the way we calculate “citizen net worth”, but in a democracy such a thing takes a long time, so it’ll probably be a few years, and we’ve already been at it for four. And that’s in a country of 5.6 million people, just imagine how slow it’d be in the WTO.
"a bigger house and yard naturally translates to a higher quality of life"
Only holding all else equal, which is impossible. Higher density neighbourhoods provide many benefits in transport, health, culture. Which is why demand far outstrips supply for accommodation in those neighbourhoods in the US.
> Yet a bigger house and yard naturally translates to a higher quality of life.
_Does_ it? I live in a 65sqm terraced house within walking distance of Dublin City Centre. For the same money I could probably get a 2-300sqm house in the middle of nowhere, but I'd have a far lower quality of life (at least subjectively; people who value space more than commute times might disagree, I suppose...)
Smaller houses in European countries vs the US is to some extent a function of differences in urban design. Though it's not like small expensive urban housing doesn't exist in the US; I'm sure many people who live in small apartments in New York think their quality of life is just fine.
Yep! A nice example is Equatorial Guinea, which has a GDP per capita comparable to Croatia's, and yet, "the UN says that less than half of the population has access to clean drinking water and that 20% of children die before reaching the age of five" [0]
There's few trickle down effects because the ruling family spends it all on stuff like shopping trips to Paris.
Means are one of the more powerful weapons in a statisticians toolbox, in a previous life I often used means to show prove points that weren't actually true, the average person is shockingly unaware of the power of outliers and how easy it is to show almost whatever you want with the right tools.
Any evidence of these claims? From my view, people have plenty of trust in statistics, they just make sure the stats reinforce their pre-existing bias first.
I just searched for GDP per capita on wikipedia, and as a citizen of Croatia I find it astonishing that Russia's GDP per capita is exactly the same as these two countries! And that's in PPP, in nominal its actually lower!
Even with its vast resource extraction industry which contributes to GDP, their worker productivity is on par with Greece!
I was surprised for the opposite reason - I was recently in Croatia and from the outside it seems ("developmentally") indistinguishable from any nearby rich country such as Italy or Germany. We live in Germany and used to live in Austria and the main visible difference was that it seems Croatians don't mind littering their archaeological sites (which is more cultural than economic I guess).
Maybe Russia is as well these days, and my perception of it as a bit of an industrial/economic shit-hole is due to now-outdated western propaganda.
Also currency conversions really distorts things. You can have a country where currency is 1/100th of US dollar but folks can buy mordern stuff from TVs to refrigerators at scaled down prices. Only imports from Western countries would be super expensive.
Technology artefacts have commodity prices as baseline and those are global now. There are no countries where a TV or a fridge are at 1/100th of what it costs in the USA.
The funny thing is one barely realizes it when one is part of the future (e.g. when using the internet to write this comment), but one also rarely realizes it when one isn't part of the future (e.g. comparing the Chinese mobile world and mobile internet infrastructure to western countries, where China is ahead for almost 2 years now).
This article doesn't quite make sense to me. It keeps confusing per capita with overall size. Like the old joke goes, America has more people per capita.
Going by the same logic, can we say that India is more developed than Singapore? And all the small anecdotes showing developed status such as that GIF of Shanghai growing or skyscrapers in Chinese cities are misleading and pointless. You could take similarly modern photos in cities of developing countries all over the world. That doesn't make any of them any more developed.
And statements like these are patently absurd: "But few of them other than China have produced companies with enough money and ambition to put one of their products in the hands of Iron Man and have ads splashed all over soccer stadiums at the World Cup". Most developing countries are home to large corporations as well. Burger King is Brazilian and I'm sure it has placed ads in many prominent events. Does this mean that Brazil is suddenly no longer a developing nation?
And the last part about how a country cannot be classified into developing or developed status because of inequality makes absolutely no sense at all. Sure Shanghai is developed compared to Yunnan. But that's not the point. The point is that as a whole, China is still very poor. As long as a large part of the country is poor and in need of modern infrastructure, it is developing. As compared to countries like Japan where almost EVERY part of it is developed. That's the whole point.
The US created the rules of WTO. Now it wants to change the rules when it thinks it is not winning by resorting to semantic games like these.
I think the major claim in the post is that labels can't be attached to such a diverse monster as a whole.
Actually I'm wondering if trade happening at the country level. You can easily build a developed country by definition size of Japan by combining several coastal provinces. And that's mostly where"made in China" comes from.
Did it confuse per capita with overall? I thought it made it clear that: in terms of per capita GNI, China isn't a developed country.
But in the context of the WTO, Trump has framed the question of whether China is a developed country as a matter of fairness. Developing nations get perks – they're allowed leeway in phasing out their trade policies that protect certain sectors.
A central question here is that China is more powerful than any single per capita metric is able to reflect, and therefore may not deserve the kind of flexibility that WTO affords to unquestionably weak and "developing" countries who struggle to transform into a market economy. China sees itself a developing country, but it's arguable whether it needs the kind of flexibility the WTO gives other developing countries.
The logical next question in this context is, are the labels "developing" and "developed" good enough to determine which countries should get preferential treatment in international trade?
That the labels are no longer adequate in many applications is further highlighted by the fact that China is so diverse and vast that there are parts of it that are basically developed countries in their own right, judging by their per capita income levels. On the other hands, there are many provinces that are indisputably low-income by all accepted standards.
The point that China is by and large poor by Western standards is addressed in the first part of the article, and stressed again later. But again, does having a large population of people who live in abject poverty warrant a country differential treatment by an international trade body in areas that have little to do with the poverty?
> The logical next question in this context is, are the labels "developing" and "developed" good enough to determine which countries should get preferential treatment in international trade?
Many economists would think so and the WTO was set up with that rule precisely because people knew that it is an uneven playing field between the companies from rich and poor countries. Without protectionism, the nascent industries in developing nations would get crushed. Almost all major industrialised nations developed by starting out with protectionism.
> That the labels are no longer adequate in many applications is further highlighted by the fact that China is so diverse and vast that there are parts of it that are basically developed countries in their own right, judging by their per capita income levels. On the other hands, there are many provinces that are indisputably low-income by all accepted standards.
Here, you are confusing per capita and overall again. Why do labels no longer matter just because China is larger than most nations? Does per capita income no longer work the same way if the population size is larger? There are rich areas in many South American countries but no one would claim that these labels no longer matter for those nations just because there are some rich people or places. Why is it so different for China?
> Here, you are confusing per capita and overall again. Why do labels no longer matter just because China is larger than most nations? Does per capita income no longer work the same way if the population size is larger?
What really scares people about China is that it is a developing country that does not behave like a developing country. It is actually getting better, making more right moves than not, and it is setting itself up to become a major contributor to the planet's wealth. This absolutely terrifies many in the West who had always thought China would "follow the playbook" and not become much more than a corrupt, heavily indebted "workhorse economy" where manufacturing could be easily outsourced.
> There are rich areas in many South American countries but no one would claim that these labels no longer matter for those nations just because there are some rich people or places. Why is it so different for China?
The anti-China bigotry at work here by definition must take China to be exceptional. Any rational comparison of China to other nations would conclude pretty obviously that China is still, on the whole, desperately poor. But this is not about rational analysis and it probably never was.
Haha, I felt disturbed by the title and conjured the same counter-question. When has the word "development" been more conflicted? I think we (or at least I) don't want to see it used anymore in the sense of "short-term economics that don't account for common well-being or ecology".
I'm more relating it to my situation where my most of my grandparents passed away early due to famine and disease before my parents became adults and might have never owned a car whereas my parents have much more modern luxuries.
There are so many metrics out there and everyone can choose whichever suits them best to make an argument. So, here's another one: Is a country able to be a nuclear power (note: Able to, not is one) - yes: Developed country.
This metric has many downsides that I'm sure others will be happy to point out, but here is an upside compared to e.g. the traditional definition: The countries wealth cannot be used for military while parts of your population starve (or have less than 12k per year, to quote the formal definition).
People in Norway enjoy a higher standard of living than most Americans. Can Norway become a military superpower? have an ambitious space program? probably not.
The US is #1 in military spending. The US is also #1 in healthcare spending by a large margin, but the additional spending does not translate into better health benefits. Comparing countries through spending can be very misleading.
India's space agency (ISRO) sent a mission to Mars for $73 million USDs (substantially cheaper than an equivalent NASA mission) while a large portion of their population live in precarious conditions.
The "developed country" denomination is useful to get an idea of a country's living standard, but can be misleading in other contexts.
Reminds me of during the world expo in Shanghai where people would push their older relatives in wheelchairs to skip the long lines in the hot humid weather.
56 comments
[ 4.6 ms ] story [ 118 ms ] thread> Therefore, In WDI 2016, there is no longer a distinction between developing countries (defined in previous editions as low- and middle-income countries) and developed countries (previously high-income countries). Regional groupings (such as “East Asia”) are now based on geographical coverage rather than a sub-set of countries that were previously referred to as developing. In some occasional cases, where data availability or context have dictated it, we’ve excluded high income from some charts or tables, and we’ve indicated that in the footnotes.
That's when it defined China as "upper middle income." That's based on Gross National Income per capita, as the World Bank calculated it. The thresholds are updated every year and adjusted for inflation.
By the World Bank's definition, China was:
low-income from 87-98 (except 97, when it was lower-middle)
lower-middle from 99-09
upper-middle thereafter
There are 56 upper-middle-income countries right now, out of 218 countries. Brazil, Kazakhstan, Libya, Malaysia, Cuba, Mexico are all upper-middle-income countries by the World Bank's latest definition.
A simple answer may be aggregates matter when it comes to country-to-country comparisons. A country's companies and government get 'strength' from the aggregate first.
I simply mean if you are comparing countries, you need to look at aggregate figures, such as total GDP or market size or population. If one country has lower GDP than another, you could say it is "poor" on that basis, even if per capita GDP (a dis-aggregated figure) were higher.
Taking your example, simply by population size and aggregate GDP and therefore ability to spend on military, India and China ARE stronger than Singapore.
China is confident that it can avoid the trap, though. Lou Jiwei, the former finance minister, famously said 2 years ago that China had a 50/50 chance of getting stuck at "middle income." But now as a head of a different government agency he recently said that he's confident that China will become a high-income country in a few years.
That's probably something we should address in another article later.
The four-tier framework seems to address e.g. Bill Gates' comments about grouping China and the DRC, but it would still leave China in a tier below Western nations even though its ability to compete in global markets probably matches or surpasses many of them.
Edit: https://webcache.googleusercontent.com/search?q=cache:PDbj62...
> However, other members can challenge the decision of a member to make use of provisions available to developing countries.
https://www.wto.org/english/tratop_e/devel_e/d1who_e.htm
No country has ever done that, though, not even the US.
One thing I’ve found difficult is comparing the US to e.g. European countries. Houses are much bigger in the US but that is in large part due to much cheaper land and often entirely different build quality. Yet a bigger house and yard naturally translates to a higher quality of life. Yet it is not an entirely fair indicator of economic strength.
Sometimes it could be downright deceptive. There was some right wing economists who deemed Mississippi more wealthty/developed than Sweden by looking as such metrics as house size, car ownerships, microwaves and TVs. Yet it did not caputure well that a lot of these people lived in houses bigger than in Sweden but in terrible condition, poor interior and could not afford important basic stuff like health care.
A part of the calculation for this process is build around the size of your bourse, which made good sense 15-20 years ago before urbanization really took off, but makes very little sense today.
It used to be that a country manor was much more expensive than a small downtown apartment. In fact most urban areas with small apartments used to house the lower working class, while country manors used to belong to the upper class.
Today that has switched around. Poor people can literally not afford to live in our largest cities while the most rural manors are now so inexpensive that my three room apartment in our second largest city could by me two-three country manors in the cheapest parts.
We’re changing the way we calculate “citizen net worth”, but in a democracy such a thing takes a long time, so it’ll probably be a few years, and we’ve already been at it for four. And that’s in a country of 5.6 million people, just imagine how slow it’d be in the WTO.
Only holding all else equal, which is impossible. Higher density neighbourhoods provide many benefits in transport, health, culture. Which is why demand far outstrips supply for accommodation in those neighbourhoods in the US.
I used to live in the centre of a city in a flat and I could walk to work, my wife could walk to work and our son could walk to school.
We now live in a house with a nice garden in a rural area where we pretty much have to drive or use the train most days.
I'm not sure you can simply map properties from size to "quality of life" - I'd say my quality of life is about the same - just different.
_Does_ it? I live in a 65sqm terraced house within walking distance of Dublin City Centre. For the same money I could probably get a 2-300sqm house in the middle of nowhere, but I'd have a far lower quality of life (at least subjectively; people who value space more than commute times might disagree, I suppose...)
Smaller houses in European countries vs the US is to some extent a function of differences in urban design. Though it's not like small expensive urban housing doesn't exist in the US; I'm sure many people who live in small apartments in New York think their quality of life is just fine.
There's few trickle down effects because the ruling family spends it all on stuff like shopping trips to Paris.
[0] https://en.wikipedia.org/wiki/Equatorial_Guinea
Negative sideeffect of your precious profession also shows with climate change disbelieve etc.
Even with its vast resource extraction industry which contributes to GDP, their worker productivity is on par with Greece!
Maybe Russia is as well these days, and my perception of it as a bit of an industrial/economic shit-hole is due to now-outdated western propaganda.
Edit: https://webcache.googleusercontent.com/search?q=cache:PDbj62...
Going by the same logic, can we say that India is more developed than Singapore? And all the small anecdotes showing developed status such as that GIF of Shanghai growing or skyscrapers in Chinese cities are misleading and pointless. You could take similarly modern photos in cities of developing countries all over the world. That doesn't make any of them any more developed.
And statements like these are patently absurd: "But few of them other than China have produced companies with enough money and ambition to put one of their products in the hands of Iron Man and have ads splashed all over soccer stadiums at the World Cup". Most developing countries are home to large corporations as well. Burger King is Brazilian and I'm sure it has placed ads in many prominent events. Does this mean that Brazil is suddenly no longer a developing nation?
And the last part about how a country cannot be classified into developing or developed status because of inequality makes absolutely no sense at all. Sure Shanghai is developed compared to Yunnan. But that's not the point. The point is that as a whole, China is still very poor. As long as a large part of the country is poor and in need of modern infrastructure, it is developing. As compared to countries like Japan where almost EVERY part of it is developed. That's the whole point.
The US created the rules of WTO. Now it wants to change the rules when it thinks it is not winning by resorting to semantic games like these.
Actually I'm wondering if trade happening at the country level. You can easily build a developed country by definition size of Japan by combining several coastal provinces. And that's mostly where"made in China" comes from.
But in the context of the WTO, Trump has framed the question of whether China is a developed country as a matter of fairness. Developing nations get perks – they're allowed leeway in phasing out their trade policies that protect certain sectors.
A central question here is that China is more powerful than any single per capita metric is able to reflect, and therefore may not deserve the kind of flexibility that WTO affords to unquestionably weak and "developing" countries who struggle to transform into a market economy. China sees itself a developing country, but it's arguable whether it needs the kind of flexibility the WTO gives other developing countries.
The logical next question in this context is, are the labels "developing" and "developed" good enough to determine which countries should get preferential treatment in international trade?
That the labels are no longer adequate in many applications is further highlighted by the fact that China is so diverse and vast that there are parts of it that are basically developed countries in their own right, judging by their per capita income levels. On the other hands, there are many provinces that are indisputably low-income by all accepted standards.
The point that China is by and large poor by Western standards is addressed in the first part of the article, and stressed again later. But again, does having a large population of people who live in abject poverty warrant a country differential treatment by an international trade body in areas that have little to do with the poverty?
Many economists would think so and the WTO was set up with that rule precisely because people knew that it is an uneven playing field between the companies from rich and poor countries. Without protectionism, the nascent industries in developing nations would get crushed. Almost all major industrialised nations developed by starting out with protectionism.
> That the labels are no longer adequate in many applications is further highlighted by the fact that China is so diverse and vast that there are parts of it that are basically developed countries in their own right, judging by their per capita income levels. On the other hands, there are many provinces that are indisputably low-income by all accepted standards.
Here, you are confusing per capita and overall again. Why do labels no longer matter just because China is larger than most nations? Does per capita income no longer work the same way if the population size is larger? There are rich areas in many South American countries but no one would claim that these labels no longer matter for those nations just because there are some rich people or places. Why is it so different for China?
What really scares people about China is that it is a developing country that does not behave like a developing country. It is actually getting better, making more right moves than not, and it is setting itself up to become a major contributor to the planet's wealth. This absolutely terrifies many in the West who had always thought China would "follow the playbook" and not become much more than a corrupt, heavily indebted "workhorse economy" where manufacturing could be easily outsourced.
> There are rich areas in many South American countries but no one would claim that these labels no longer matter for those nations just because there are some rich people or places. Why is it so different for China?
The anti-China bigotry at work here by definition must take China to be exceptional. Any rational comparison of China to other nations would conclude pretty obviously that China is still, on the whole, desperately poor. But this is not about rational analysis and it probably never was.
I'm more relating it to my situation where my most of my grandparents passed away early due to famine and disease before my parents became adults and might have never owned a car whereas my parents have much more modern luxuries.
This metric has many downsides that I'm sure others will be happy to point out, but here is an upside compared to e.g. the traditional definition: The countries wealth cannot be used for military while parts of your population starve (or have less than 12k per year, to quote the formal definition).
The US is #1 in military spending. The US is also #1 in healthcare spending by a large margin, but the additional spending does not translate into better health benefits. Comparing countries through spending can be very misleading.
India's space agency (ISRO) sent a mission to Mars for $73 million USDs (substantially cheaper than an equivalent NASA mission) while a large portion of their population live in precarious conditions.
The "developed country" denomination is useful to get an idea of a country's living standard, but can be misleading in other contexts.