HIGH INCOME COUNTRIES: All About It and Full List of High-Income Countries

HIGH INCOME COUNTRIES
Photo Credit: Global Times

During the Cold War, the term “first world” commonly referred to countries that were allied with the United States and NATO. When classifying countries as “developed” or “advanced,” several institutions, including the Central Intelligence Agency (CIA) and the International Monetary Fund (IMF), consider factors other than high per capita income. Some high-income countries, for example, may also be developing countries, according to the United Nations. The Gulf Cooperation Council countries, for example, are classified as developing high-income countries. As a result, a high-income country can be classified as developed or developing. Although Vatican City is a sovereign state, the World Bank does not classify it as such. We will look at the list of World Bank high-income and middle-income Asia countries.

High Income Countries Definition

The World Bank defines a high-income economy as one with a gross national income per capita of US$12,696 or more in 2020, calculated using the Atlas method. While the terms “high-income” and “first world” are frequently used interchangeably, the technical definitions of these terms differ.

World Bank High Income Countries

The World Bank’s most recently updated high-income country classification list provides a snapshot of the international community’s pre-pandemic economic health. Every year in July, the most recent updates are released.

The World Bank examines all 189 of its member countries, as well as 28 other economies with populations of greater than 30,000, to create the high-income category listings. The update for 2020 is based on data collected before the coronavirus pandemic, which disrupted the global economy.

What are the World Bank High Income Countries Classifications?

The World Bank divides economies into four categories: low income, lower-middle income, upper-middle income, and high income.

The categories are used to show how different groups of countries perform in terms of measures such as poverty reduction, growth, increasing income per capita, and so on. For example, while more than 6 in 10 of the world’s population lived in low-income countries in the 1990s, that figure has now dropped to around 1 in 10.

Gross national income (GNI) per capita is the primary indicator of a country’s wealth and position in the four categories. The 2020 GNP per capita thresholds are as follows:

  • Low income: less than $1,036 per month
  • Lower-middle income: $1,036 to $4,045
  • Upper-middle income: $4,046 to $12,535
  • High income: more than $12,535

The Bank also considers geography, lending eligibility, and an economy’s fragility.

According to the World Bank, an economy’s classification can be changed for two reasons. One type of change is within the country, such as increased or decreased economic growth, significant shifts in domestic inflation, or exchange rates. The data can also be influenced by population changes, which will change the GNP ratios. Adjustments to the thresholds are the second most likely cause of a country moving between categories.

List of High Income Countries

Countries assess their wealth using a variety of metrics. The list of top ten high-income countries is below based on disposable income per capita, which measures how much money a person has available to spend on goods and services after paying taxes.

Money per capita can refer to per capita income, per capita money supply, per capita GDP, or even per capita net worth. For example, income per capita can refer to discretionary income per capita or disposable income per capita.

The figures for the list of high-income countries are from the Organization for Economic Co-operation and Development (OECD) as of 2020. Disposable income per capita refers to the OECD’s household net-adjusted disposable income per capita, and all figures are in US dollars.

#1. United States of America

According to the World Bank, the United States will have 329.5 million people in 2020, with a disposable income per capita of $54,854 in 2019. The country’s GDP was $20.89 trillion in 2020, making it the largest on our list and the world’s largest economy. Financial services, professional and business services, manufacturing, and health care are all important sectors in the United States.

#2. Luxembourg

According to the World Bank, the small country of Luxembourg had $49,860 in disposable income per capita in 2020, with an estimated population of about 632,000 people. In 2020, the European country sandwiched between Germany, France, and Belgium had a GDP of $74 billion. In terms of GDP, the United States dwarfs Luxembourg by roughly 300 times its size. Luxembourg’s economic success is largely due to banking, which has grown the country into a global financial center.

#3. Switzerland 

Switzerland’s disposable income per capita was $43,035. Its GDP was $619.6 billion, and its population was 8.6 million In 2020. The country has strong financial and tourism sectors, as well as a skilled labor force. Pharmaceuticals, gold, watches, and jewelry are Switzerland’s main exports.

#4. Germany

Germany has a per capita disposable income of $42,433 in 2020. Also, Germany has an estimated population of 83.2 million people in 2020 and is a major exporter, particularly of automobiles, as it is home to major automakers such as Volkswagen, Daimler, and BMW. Furthermore, Germany is also a major chemical exporter, with a GDP of $4.56 trillion in 2020.

#5. Australia 

Australia’s disposable income per capita was $42,547 In 2020. Australia’s GDP was $1.43 trillion, and its population was 25.7 million people In 2020. The country is rich in natural resources, which is reflected in one of the country’s primary economic engines—mining.

#6. Norway 

Norway’s disposable income per capita was $40,742 in 2020. Norway, with a population of 5.4 million people and a GDP of $337 billion in 2020, is a natural resource-driven economy based on oil, fishing, and metals. Also, Norway’s sovereign wealth fund is worth slightly more than $1.15 trillion and is largely funded by the country’s oil industry.

#7. Austria

Austria had a per capita disposable income of $38,726 in Europe. In 2020, the country had 8.9 million people and a GDP of $497 billion. The country’s shift toward privatization, i.e. less regulation, has improved the economy over time. The energy industry drives much of the country’s economic growth, accounting for roughly 30% of gross domestic consumption.

#8. Belgium 

Belgium, another European country, enters the top list of high-income countries in 2020, with a per capita disposable income of $37,925. In 2020, Belgium had a population of 11.6 million people and a GDP of $613 billion. The country is famous around the world for its chocolate shops and factories. Given its geographical location, Belgium’s economy is strong in exporting, particularly vehicles and medicine.

#9.  Netherlands

In 2020, the Netherlands had a per capita disposable income of $38,552 and a GDP of $1 trillion. It had a population of 17.4 million people in 2020, and much of its recent success has been attributed to natural gas discoveries. Its largest export category is refined petroleum.

#10. Canada

Canada comes in the last list of high-income countries, with a per capita disposable income of $37,171 in 2020. In 2020, the country had a GDP of $1.77 trillion and a population of 38 million. The discovery of oil sands in Alberta propelled the nation’s economy, and the country is now one of the world’s largest oil producers. Cars, gold, and vehicle parts are among the other top exports.

What Drives Higher Average Incomes?

Again, disposable income differs from discretionary income. Disposable income refers to the money remaining after taxes. As a result, changing spending habits do not affect disposable income. Instead, raising wages or lowering taxes is critical to increasing disposable income.

A few key aspects of increasing disposable income per capita include the following. A country’s income per capita can be increased by reducing its population while maintaining its income. However, with most countries experiencing population growth, this may be difficult to maintain or implement. Government policies are generally a simpler way to increase per capita income because governments can enact a variety of policies. Others may include increasing employee working hours, government investment, and more worker training or education.

Working hours

An easier way to raise per capita income is to increase the total number of hours worked. In other words, more employees transitioning from part-time to full-time equals more income per person. This also goes hand in hand with lowering unemployment; more employed people raise per capita income.

Government investment

Investing in technology can help to improve process efficiency and increase income potential. A more efficient allocation of resources can raise per capita income. Government spending on infrastructure and defense will also increase income. As previously stated, government policies such as tax breaks and subsidies can also increase per capita income.

Education

Better or more educated workers can increase earnings. Overall, workers who can perform more complex tasks earn more money. These workers can also implement more productive methods of performing tasks, which can reduce the number of hours worked or allow employees to work on more difficult tasks for higher pay.

Middle-Income Countries

The World Bank defines middle-income countries (MICs) as economies with a gross national income (GNI) per capita of between $1,036 and $12,535. The World Bank uses MICs as one of its income categories to classify economies for operational and analytical purposes.

Recognizing Middle-Income Countries (MICS)

Historically, the World Bank classified all economies as low, middle, or high-income. It now further categorizes countries as low-, lower-middle-, upper-middle-, or high-income.

The World Bank bases this classification on GNP per capita in current US dollars converted using the Atlas method of a three-year moving average of exchange rates. It regards GNP as a broad measure and the most accurate indicator of economic capacity and progress.

The World Bank used to refer to low- and middle-income economies as developing economies; however, the term was dropped from its vocabulary in 2016, citing a lack of specificity. The World Bank now categorizes countries based on their region, income, and lending status.

Characteristics of a Middle-Income Country (MIC)

Lower-middle-income and upper-middle-income economies are classified as MICs. Lower-middle-income economies have per capita GNPs ranging from $1,036 to $4,045, while upper-middle-income economies have per capita GNPs ranging from $3,046 to $12,535.

By region, size, population, and income level, MICs range from tiny nations with small populations, such as Belize and the Marshall Islands, to all four BRIC giants: Brazil, Russia, India, and China. China and India account for nearly one-third of the world’s population and are growing in importance in the global economy.

There are 53 economies with lower-middle incomes and 56 with higher-middle incomes. Because of the diversity of these 109 MICs, many of them face very different challenges. The most pressing issue for lower-middle-income countries may be providing essential services such as water and electricity to their citizens. The greatest challenges for upper-middle-income economies may be reducing corruption and improving governance.

Significance of Middle-Income Countries (MICs)

MICs are critical to global economic growth and stability. Sustainable growth and development in MICs, according to the World Bank, have positive spillover effects on the rest of the world. Poverty alleviation, international financial stability, and global cross-border issues such as climate change, sustainable energy development, food, and water security, and international trade are examples.

MICs have a combined population of five billion people, accounting for more than 70% of the world’s seven billion people, and are home to 73% of the world’s economically disadvantaged. MICs account for roughly one-third of global GDP, making them a major driver of global economic growth.

High-Income Countries in Asia

Asia is the largest of the seven continents, and many Asian countries are wealthy or high-income earners in a variety of areas, including natural beauty and resources, priceless cultural heritage, fertile land, and so on. This session will concentrate on monetary riches at the national level, using Gross Domestic Product (GDP) and GDP per capita to determine Asia’s wealth.

High-Income Countries in Asia, ranked by GDP

GDP, arguably the most widely used economic indicator, measures the total value of all goods and services produced by a country over a given period (typically a month or year). GDP is an excellent at-a-glance snapshot of a country’s current economic health because of this all-in-one approach.

Top 10 High-Income Asia Countries (2020 GDP, Int$ PPP – World Bank)

  • China – $24.27 trillion
  • India – $8.91 trillion
  • Japan – $5.33 trillion
  • Indonesia – $3.30 trillion
  • Turkey – $2.37 trillion
  • South Korea – $2.23 trillion
  • Saudi Arabia – $1.63 trillion
  • Thailand – $1.3 trillion
  • Iran – $1.1 trillion
  • Pakistan – $1.08 trillion

GDP, as useful as it is, is not the final word on a country’s wealth. China and India, for example, are the world’s two most populous countries, so it stands to reason that they rank high in terms of total GDP—a country with more workers is likely to produce more goods overall. Different metrics, however, frequently produce a different list of high-income countries.

High-Income Countries in Asia, ranked by GDP Per Capita

GDP per capita divides GDP by the number of citizens in a country, providing a more detailed picture of the average person’s well-being. According to the International Monetary Fund, the ten richest Asian countries in terms of GDP per capita in October 2021 are listed below (IMF).

Top 10 High-Income Asia Countries (2020 GDP per capita, Int$ PPP – IMF)

  • Singapore – $107,680
  • Qatar – $100,040
  • United Arab Emirates – $74,240
  • Macao (China) – $67,470
  • Brunei – $65,670
  • Hong Kong (China) – $65,400
  • Taiwan – $61,370
  • Bahrain – $53,130
  • Saudi Arabia – $48,910
  • South Korea – $48,310

Singapore is the highest-income country in Asia, with a per-capita GDP of $107,690 (PPP Int$). Singapore’s wealth is due to a low level of government corruption and a business-friendly economy, not oil. Many foreign investors come to Singapore to do business, bringing their money with them. Qatar, an oil-rich country on the Arabian Peninsula in the Middle East, is Asia’s second-richest country. Qatar’s GDP per capita is $100,040, and the country’s oil reserves have enough oil to last at least another two decades.

Is UK a high-income countries?

According to a new analysis published in the journal The Lancet Planetary Health, high-income countries such as the United Kingdom and the United States bear the overwhelming responsibility for global ecological breakdown and must urgently reduce their use of natural resources by more than 70% to achieve a sustainable level of consumption.

Which is the best country for income?

  • Denmark ranks first in income equality and 12th in the best countries overall.
  • Norway ranks second in income equality and thirteenth in the best countries overall.
  • Sweden ranks third in terms of income equality.
  • Finland ranks fourth in terms of income equality.
  • The Netherlands ranks fifth in terms of income equality.
  • Canada ranks sixth in terms of income equality.
  • Switzerland ranks seventh in terms of income equality.
  • New Zealand ranks eighth in terms of income equality.

What is a high-income economy?

The World Bank defines a high-income economy as one with a gross national income per capita of US$12,696 or more in 2020, as calculated using the Atlas method. While the terms “high-income” and “first world” are frequently used interchangeably, the technical definitions of these terms differ.

Which countries are low income?

Here is a list of low-income countries:

  • Afghanistan
  • Burkina Faso (Burkina Faso)
  • Burundi
  • Central African Republic.
  • Chad
  • Congo,
  • Eritrea.
  • Ethiopia

Is Japan high-income country?

Japan’s economy is a highly developed free-market economy. It is the world’s third-largest economy in terms of nominal GDP and fourth-largest in terms of purchasing power parity (PPP). It has the second-largest developed economy in the world.

Is Russia a low-income country?

Russia is a wealthy country with the world’s eleventh-largest economy. Its natural resources, such as crude oil, natural gas, and energy, have fueled GDP growth over the last two decades, resulting in significantly higher living standards for many.

Conclusion

We summarized information available by providing a list of the World Bank’s high-income countries in Asia in this paper.

Another trait associated with good health is years of education. There is a wide range of trends in these high-income countries. Education levels have continued to rise unabated in many high-income countries, particularly in Asia, but not in the United States.

High Income Countries FAQs

What are high and low income countries?

For the current fiscal year 2023, low-income economies are defined as having a GNP per capita of $1,085 or less in 2021, calculated using the World Bank Atlas method; lower-middle-income economies have a GNP per capita of between $1,086 and $4,255; upper-middle-income economies have a GNP per capita of between $1,086 and $4,255.

What is considered a high income?

A three-person family needed an income between $106,827 and $373,894 to be considered upper-middle class, according to Rose. Rich people earn more than $373,894 per year

Is Italy a high-income country?

Italy has one of the highest wealth-to-income ratios among high-income countries (the total value of household net wealth, approximately 8.5 trillion euros, is equivalent to about seven years of national income), but little was known about how this wealth was distributed before this paper.

References

  1. DISCRETIONARY INCOME DEFINITION: What It Is, Difference and Examples
  2. Per Stirpes: Definition, Comparison, Distribution, and Beneficiary Methods.
  3. Trillion dollar companies list 2019/2020
  4. MIDDLE-INCOME TRAP: What It Is and What You Should Know
  5. FASHION DESIGN BUSINESS: How to start a home-based fashion design business.
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