The Financial Express

Paradox of categorisation of countries

| Updated: October 24, 2017 14:22:47

Paradox of categorisation of countries

It is indisputable that the world is divided between two groups of countries -- developed and developing. Also, it is indisputable that some developing countries lag so far behind in size and shape of their economies that it is difficult to treat them alike with the rest in the category. It is thus problematic to put countries like China and Congo on the same scale from the perspective of their classification as developing countries. While the expression 'developing' is euphemism for the latter, it is, if anything, demeaning for the former. The same holds good to Malawi and Malaysia - both classified in the same group. So, lumping disparate countries together under the same tag at times tends to be ironic, and more importantly, such groupings can negate the purpose of many an international rules and regulations.
It is interesting to see that the World Bank in its 2016 edition of the World Development Indicators has come up with a change in this regard. It no longer distinguishes between 'developed' and 'developing' countries in the presentation of its data. The change marks an evolution in thinking about the geographic distribution of poverty and prosperity. Beside reflecting a desire for more analytically useful data, the WB's move also reflects the changing stakes of development as the world shifts from the Millennium Development Goals (MDGs), created by the UN in 1990 as a road map for fighting global poverty, to the Sustainable Development Goals (SDGs), set last year by the global community.
The International Monetary Fund says its own distinction between advanced and emerging market economies "is not based on strict criteria, economic or otherwise." The United Nations doesn't have an official definition of a developing country, despite slapping the label on 159 nations. And the World Bank itself had previously simply lumped countries in the bottom two-thirds of gross national income (GNI) into the category, but even that comparatively strict cut-off wasn't very useful.
Thus the problem remains, and it becomes acute when donor governments and agencies find it difficult to determine yardsticks to provide assistance to countries which though categorised as developing are actually those notable only for their poverty and backwardness. The term least developed countries (LDCs), although more befitting, is often ignored for the sake of, well, euphemism. In the globalised trade regime of today, the problem becomes conspicuous when it comes to deciding on exemptions, incentives, technical assistance and capacity building of these countries. Because of their immensely wide range and heterogeneity in economic and social standards, there exist great asymmetries that figure significantly in deciding which of the countries deserve what. The World Trade Organisation (WTO) is faced with this problem, and although it is dealing with the problem cautiously and judiciously, the divergences among the poor countries do not offer sufficient scope to address it adequately.
Among the LDCs themselves, divergences make it difficult to even put them in a group. There is clash of interests often overlooked or gets missed that emerge as potential barrier to providing facilities in an equitable manner. That is why LDCs have their own groupings capable of jeopardising multilateral disciplines.
Devising a clear and simple mechanism to put countries in brackets is no longer possible. Given this reality, it is important to develop certain innovative criterion to adjust to the peculiarities of countries apparently of similar economic and social standings.
No doubt, it is the development spree prompted largely by technology and improved literacy that has brought about dynamic changes in the lifestyle of people across the globe. And this has added newer dimensions that may not be in keeping with what they are bracketed for. For example, Bangladesh being an LDC has, to its credit, attained much higher accomplishments in some of the social indicators than many of the countries far ahead in economic ratings. Singapore with its tag as a developing country is ahead of some of the advanced countries in vital economic and social indicators.
On the flip side, poverty pockets in developing countries, like India and China, not only undermine a good deal of their astounding achievements, but millions of impoverished people inhabiting these poverty pockets are far behind the living standard of many LDCs. This goes to explain that classification on the basis of income is not always helpful. It needs to be specific in order to be meaningful.
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