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High, Middle and Low Income Countries

High, Middle and Low Income Countries

Author: Zach Lamb
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This lesson will define high income countries, middle income countries and low income countries

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Tutorial

High, Middle, and Low Income Countries

Source: Intro Music by Mark Hannan; Public Domain

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[THEME MUSIC PLAYING] Hello, welcome to Sociological Studies. In this lesson, we're going to discuss how social scientists delineate the countries of the world in terms of income. We have high income, middle income, and low income countries. We now classify countries this way-- after the Berlin Wall fell in 1989 and ended the Cold War.

So you might be more familiar with First World countries, Second World countries, Third World countries-- that kind of terminology. Well that kind of terminology came from the Cold War. Well the First World was the capitalist countries, Second World were the Soviet countries, Third World was basically everybody else.

But now that we don't have the Cold War happening anymore, and we're not so concerned about the socialist/capitalist divide, these categories don't make a lot of sense. So this is a better way to capture the stratification across the globe because it's based on income, it's based on GDP per capita. So GDP-- if you're not familiar with the economic term-- stands for Gross Domestic Product, which is basically just a way to measure the amount of output the economy is putting out. "Output" and "income" are synonymous in economic terminology.

So this measures the amount of income that a country has. And you divide the amount of income that the country has by the number of people, and that gives you the gross domestic product per person, or per capita. And so high income, mid income, and low income countries then use this measure, and it's much better for today's society because it allows countries to move.

So I could either get more income per capita or the economy could expand, and we could then all of the sudden become a high income country. Like Chile, for example, is now a high income country, but in this model, it was a third world country. And these categories tend to be more fixed.

So let's look at each of these then and break them down. What defines a high income country, middle income, and a low income country, with some examples. For starters, high income countries have an average GDP per capita of over $12,000.

So this is the low end-- countries can be much higher than that. So, for instance, in the United States the average per capita income is $45,000, it's quite a bit bigger than $12,000. But $12,000 is the threshold to be considered relatively well-off relative to the other countries in the world.

So in fact, the countries that are in the high income category account for 80% of the world's wealth. That's an astonishing figure. When you think about it, the world is really unequal.

High income countries are what we commonly call the "Global North." That being European countries in Western Europe-- Spain, Portugal, France, Germany, Great Britain, Norway, Sweden, Denmark. We have America as well, and Canada. Mexico, Russia. And if you'll notice about these, if you were to look at all these countries on the globe, they would be in the Northern part of the globe. That is where most of the world's wealth is concentrated, and that is what's behind this expression, the "Global North."

There are some high income countries in South America-- Argentina, and, as I mentioned, Chile is up there as well. We also see Saudi Arabia, Australia, New Zealand. These are high income countries, these countries were the first to industrialize, the first to develop industrial capitalism. Why? It's anyone's guess, it's a hotly debated topic.

Geographer Jared Diamond wrote a book called Guns, Germs, and Steel, speculating, well, what was it about these Global North countries? Why did they adopt capitalism first? Why were they the first to industrialize?

Well, it unquestionably got them a start. So they were the first to industrialize. And then industrial production increased productivity, gave the economic might then to bully other countries around, like colonial power and colonial expansion. And now, these are the countries that have unanimous computer technology, computer technology and industrial production is widespread.

So they can control the global economy. For instance, the price of Peruvian coffee-- was not a high income country-- is largely determined by the market vicissitudes of high income countries. High income countries then are able to hold on to their power because they can bully other countries around and control the global economy.

Next we have middle income countries, who have an average GDP per capita-- annual income-- between $2500 and $1200. About 57% of humanity actually lives in these countries. And that's in large part helped by China, who is a middle income country.

China has pretenses and is on the rise. It is likely that they will advance into the high income country category within the 21st century, but right now they're still a middle income country, along with many former Soviet countries. Kazakhstan, Belarus, Ukraine, Mongolia. Lot of countries in South America-- Brazil, Colombia, Peru. These are middle income countries.

And just over half of the people within each country, then-- just over half of the people in middle income countries live in cities. The other, just under half, live in rural areas. Industrial jobs are in these countries, in the cities. A lot of people still do farm for a living out in the country. But, critically, internet access and advanced computational and information processing technologies are not as readily available in middle income countries.

Finally we have low income countries, which account for 20% of the world's people, who make less than $2,500 annually. These countries-- primarily concentrated in Africa, but there are some in Southeast Asia, as well, and in the Middle East, such as Afghanistan and Pakistan, as well as Myanmar in Southeast Asia, formerly Burma-- these countries are primarily rural and agrarian. Their economies are not concentrated in cities and there's not a lot of industrial production.

So people are more traditionally rural dwellers and using rural cultivation methods. These people have problems with population density and disease. These problems have been largely eradicated in high income countries, but, because of the low income to combat them, these countries have these problems and suffer from these problems.

Imagine living on less than $1 a day. That is a situation that a lot of people in the world have to deal with, and it's almost unimaginable for us as Americans. We just take this stuff for granted. But other people live radically different, much poorer lives.

For instance, my girlfriend was nannying these two little 10-year-old girls, who were relatively prosperous and in America. And a commercial came on asking for money to donate to help children in a poor country. And it showed these children like struggling to get to school over this footbridge that water was coming down all over and they had to navigate this dangerous footbridge.

And one of the girls just-- shockingly to me, anyway-- says, why don't they just drive to school? What do you mean why don't they just drive to school, like they can't drive to school, they don't have what we have. And so it was just like a teachable moment there. But that is the level at which Americans take this for granted. People in high income countries, as their children, take their lives for granted.

Well this was a descriptive overview of high income, middle income, and low income countries, and some of the characteristics and differences of each. Hope you enjoyed the lesson, and have a great rest of your day.

TERMS TO KNOW
  • Low Income Countries

    Countries with a below average standard of living as measured against the global average.

  • Middle Income Countries

    Countries with a standard of living that is consistent with the global average.

  • High Income Countries

    Countries with an above average standard of living as measured against the average global standard of living.