By Cecilia Juambeltz*
In the field of international cooperation, particularly in development cooperation, much is said of High, Middle and Low Income Countries. This characterization may only seem as a way of ordering these countries. But in practice it has important consequences, as it defines the type of aid these countries receive. Donor countries base on these categories to define their aid strategies.
As stated by the World Bank, economies are divided according to 2012 GNI per capita, calculated using the World Bank Atlas method. The groups are:
Table 1: World Bank definition of income categories
|Low Income||Lower Middle Income||Upper Middle Income||High Income|
|USD 1035 or less||USD 1036 – USD 4085||USD 4086 – USD 12615||USD 12616 or more|
Source: World Bank (http://data.worldbank.org/about/country-classifications).
Supposedly, Middle Income Countries (MICs) have a higher level of development, are better able to take care of its people and therefore require less aid. But in fact, MICs, the same as Low Income Countries, have large pockets of poverty, inequalities, lack development and have serious governance problems that threaten the sustainability of their own development process.
In the words of authors Andy Sumner and Ravi Kanbur, “over the past few years a large number of once-poor countries have reached middle-income country status, set by the World Bank at USD 1,000 per person per year. The global poverty problem has changed: most of the world’s poor no longer live in poor countries”. The authors state that the countries in which many of the world’s poor live have gotten richer, in per capita terms, and have been reclassified as Middle Income Countries instead of Low Income Countries. China and India together account for about half of the world’s poor. However, if those two countries are removed from the MICs classification, the proportion of the world’s poor in MICs has still tripled. This is true for countries such as Nigeria, Pakistan, Indonesia but also some surprising ones such as Sudan, Angola and Cameroon. There is a now a concentration of the poor (850 million, or two-thirds of the world’s poor) in five populous MIC countries: Pakistan, India, China, Nigeria and Indonesia. The combined population of the five so called ‘PICNI’ countries is about 3 billion people and they are home to about 70% of the world’s poorest people.
MICs have an important role in political, security and trade issues, the production and protection of Global Public Goods (GPGs) and acting as development hubs for their respective regions. But they are also vulnerable to external shocks, or are recovering from conflicts. Despite the progress made, formidable challenges remain in areas such as poverty, health, education and climate change.
José Antonio Alonso points out the following among the arguments to maintain and increase support to MICs:
• The 76.7 % (933 million people) of the world’s poor live in these countries; if poverty is to be eradicated, it is necessary to obtain efficient achievements in development and social cohesion.
• The economic and social progress in these countries is highly vulnerable and affected by external shocks or internal crisis; therefore, international support can help consolidate their development achievements, making them irreversible.
• The MICs contribution to GPGs, especially environmental, is decisive; this justifies that the international community supports these countries to provide GPGs.
• Some of these countries have an important weight and leadership role in their regions, thus their development accomplishments could have a positive effect on third countries, providing stability to the international system, as is the case of India and Indonesia.
It is necessary to undertake a conversion of international aid into an incentive framework which supports development goals, a system capable of consolidating the economic and social achievements, to avoid possible setbacks.
As an example of the importance to continue supporting MICs, it is possible to refer to Uruguay, my home country. Uruguay is characterized as a Middle Income Country like the rest of Latin American countries (with the exception of Haiti and Nicaragua). It is defined as Upper Middle Income Country (in both World Bank and OCDE classifications), and has good human development indicators. With an existing welfare state since the early twentieth century, which has since fallen into decay, Uruguay today suffers problems of poverty, insecurity and inequality. Can international cooperation help Uruguay to achieve full development? I personally believe so. Cooperation projects should focus on the areas where Uruguay mostly needs aid, such as education, poverty and inequality reduction, good governance, innovation and environment.
Development cooperation is important to MICs, specifically regarding the consolidation of their development, helping these countries to take steps towards a higher level of development and also avoiding setbacks in this process. It can help to take the big leap towards economic take off, transforming them from developing countries to developed countries.
It is therefore essential to continue to support MICs, both Upper and Low Middle Income Countries, through cooperation projects which are appropriate and tailored to their specific needs. MICs have a key role to play in the international stability and prosperity of the 21st century.
* Cecilia Juambeltz has a Master’s in International Studies from the University of Barcelona where she wrote a thesis on Development Cooperation in Middle Income Countries: The case of Uruguay.
For your reference:
ALONSO J.A. (2007) Cooperation with Middle Income Countries, Madrid: Editorial Complutense
CARRINO L. (2009) Perlas y Piratas: Crítica de la cooperación para el desarrollo y nuevo multilateralismo, Barcelona: Editorial Icaria
GLENNIE J. (2011), “The role of aid to middle income countries: a contribution to evolving EU development policy”, Working Paper 331, June 2011, Overseas Development Institute, London. At: [http://www.odi.org.uk/resources/docs/7189.pdf]
GÓMEZ GALÁN M. y SANAHUJA J.A. (1999) El sistema internacional de cooperación al desarrollo, Madrid: CIDEAL
RIVERO ILLA M. (2010) “La Cooperación Internacional como herramienta de desarrollo en Uruguay”, September 23, 2010, Departamento de Cooperación Internacional de la Oficina de Planeamiento y Presupuesto, Montevideo. At: [http://www.auci.gub.uy/pdfs/snci.pdf]
SUMNER A. y KANBUR R. (2011a) “Why give aid to middle income countries”, Poverty Matters, February 23, 2011, GUARDIAN, London. At: [http://www.guardian.co.uk/global-development/poverty-matters/2011/feb/23/aid-to-middle-income-countries]
SUMNER A. y KANBUR R. (2011b) “Poor countries or poor people? Development assistance and the new geography of global poverty”, Working Paper, Charles H. Dyson School of Applied Economics and Management, Cornell University, Ithaca. At: [http://www.ids.ac.uk/files/dmfile/CornellDysonwp1108.pdf]
WORLD BANK, “Development Results in Middle-Income Countries, an Evaluation of the World Bank´s Support”, Washington, 2007. Independent Evaluation Group. At: [https://openknowledge.worldbank.org/handle/10986/6841]