In 1984, I took Geography A level.  I still find both physical and human geography fascinating and all 3 of my children have disappointed me by not even taking it at GCSE.  In human geography in the 80’s we referred to the “Third World”, the “North-South divide” and the “Developing World”.  Terminology has moved on now but actually there are the same number of variations and the same risk of offending at least one person in the room as there were back then.

Country classification nowadays is very much based on average incomes of their populations.  I can never remember the difference between GDP and GNP.  Here’s a summary from the Irish Central Statistics Office:

Gross Domestic Product (GDP) and Gross National Product (GNP) are closely related measures. GDP measures the total output of the economy in a period i.e. the value of work done by employees, companies and self-employed persons. This work generates incomes but not all of the incomes earned in the economy remain the property of residents (and residents may earn some income abroad). The total income remaining with Irish residents is the GNP and it differs from GDP by the net amount of incomes sent to or received from abroad.  In Ireland’s case, for many years past, the amount belonging to persons abroad has exceeded the amount received from abroad, due mainly to the profits of foreign-owned companies, and our GNP is, therefore, less than our GDP.

Just when you thought you’d mastered the terminology, I should tell you that GNP is now called GNI.  The GNI per capita is the dollar value of a country’s final income in a year, divided by its population. It reflects the average income of a country’s citizens.  Generally people living in countries with higher GNI per capita tend to have longer life expectancies, higher literacy rates, better access to safe water, and lower infant mortality rates.  The UK is currently rated 18th in the world, Liberia is 180th out of a total of 183 ranked countries.

Actually, GNI is not exactly the same as GNP for economists but can be thought of as very similar for us lay people:

  • GNP = GDP + Net Income Receipts from assets abroad less income of foreign nationals within the country.
  • GNI = GDP + payments by foreign nationals into the country for such things as investments (interest and dividends), less similar payments paid out of the country.

The World Bank and International Monetary Fund recategorise countries on 1st July each year according to factors such as their income growth, inflation, exchange rates, and population change – all of which influence GNI per capita:

Threshold GNI/Capita (current US$)
Low-income < 995
Lower-middle income 996 – 3,895
Upper-middle income 3,896 – 12,055
High-income > 12,055

Liberia is currently categorised as a low income economy and this was the term used by Kola today when he was teaching.  He is the local instructor who is still standing (his colleague collapsed with malaria in the middle of the first lecture this morning).  So that’s the terminology I’m going to use while I’m here.

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