The
World Bank
The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...
has used the Atlas method
since 1993 to estimate the economic size of countries based on their
gross national income
The gross national income (GNI), previously known as gross national product (GNP), is the total amount of factor incomes earned by the residents of a country. It is equal to gross domestic product (GDP), plus factor incomes received from ...
(GNI) in
U.S. dollars.
To convert a country's GNI from its local currency to U.S. dollars, the Atlas method uses a conversion factor that averages
exchange rate
In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...
s over three years. This helps reduce the impact of temporary exchange rate changes. Additionally, it adjusts for differences in
inflation
In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...
rates between the country (using its
GDP deflator
In economics, the GDP deflator (implicit price deflator) is a measure of the money price of all new, domestically produced, final goods and services in an economy in a year relative to the real value of them. It can be used as a measure of the val ...
) and several
developed countries
A developed country, or advanced country, is a sovereign state that has a high quality of life, developed economy, and advanced technological infrastructure relative to other less industrialized nations. Most commonly, the criteria for eval ...
(using a
weighted average of their GDP deflators in
Special Drawing Rights, or SDR, terms). The converted GNI in U.S. dollars is then divided by the country's midyear population to determine GNI per capita.
The World Bank prefers the Atlas method for comparing the economic sizes of countries. It is used to categorize countries into low, middle, and high-income groups and to determine their eligibility for loans. This method helps avoid abrupt changes in country classification due to short-term economic fluctuations.
See also
*
List of countries by GNI (nominal) per capita
This is a list of countries by gross national income per capita in 2023 at nominal values, according to the Atlas method, an indicator of income developed by the World Bank. The GNI per capita is the dollar value of a country's final income in ...
*
World Bank high-income economy
A high-income economy is defined by the World Bank as a country with a gross national income per capita of US$14,005 or more in 2023, calculated using the Atlas method. While the term "high-income" is often used interchangeably with " First World" ...
References
{{reflist
Gross domestic product
International macroeconomics
World Bank