What Is a Middle-Income Country? (MIC)
As of July 2018, according to the World Bank, middle-income countries (MICs) are defined as lower-middle-income economies with a GNI per capita between $1,006 and $3,955 and upper-middle-income economies with a GNI per capita between $3,956 and $12,235. MICs are one of the income categories that the World Bank uses to classify economies for operational and analytical purposes.
Middle-Income Countries (MICS) Explained
The World Bank has historically classified every economy as low, middle, or high income. The World Bank further specifies countries as having low, lower-middle, upper-middle, or high-income economies. The World Bank uses GNI per capita as the basis for this classification because it views GNI as a broad measure that is considered the single best indicator of economic capacity and progress. The World Bank used to refer to low-income and middle-income economies as developing economies. In 2016, the World Bank chose to drop the term from its vocabulary citing a lack of specificity in the term. Instead, the World Bank now refers to countries by their region, income, and lending status.
Middle-Income Country (MIC) Characteristics
MICs are broken up into lower-middle income and upper-middle income economies. Lower-middle-income economies have per capita GNIs between $1,006 and $3,955 while upper-middle economies have per capita GNIs between $3,956 and $12,235. MICs are a very diverse group by region, size, population, and income level ranging from tiny nations with small populations such as Belize and the Marshall Islands to all four of the BRIC giants—Brazil, Russia, India, and China. China and India together account for nearly one-third of humanity and continue to be increasingly influential players in the global economy.
There are 53 lower-middle income economies and 56 upper-middle economies. The diverse nature of these 109 MICs means that the challenges facing many of them are quite different. For nations in the lower-middle-income category, the biggest issue may be providing its citizens with essential services such as water and electricity. For the economies in the upper-middle-income category, the greatest challenges may be curbing corruption and improving governance.
The Significance of Middle Income Countries (MICs)
MICs are essential for continued global economic growth and stability. According to the World Bank, sustainable growth and development in MICs have positive spillovers to the rest of the world. Examples are poverty reduction, international financial stability and global cross-border issues including climate change, sustainable energy development, food and water security, and international trade.
MICs have a combined population of 5 billion, or over 70% of the world’s 7 billion people, and include 73% of the world’s poor. Representing about one-third of global GDP, MICs are a major engine of global economic growth.
Graduating from Lower to Upper-Middle Income
Countries graduate from one level to another depending on their GNI per capita. According to a July 2019 report by the World Bank, India continued to be a lower-middle-income country along with 46 others in the South Asia region while Sri Lanka moved to the upper-middle-income group for 2020. Sri Lanka had been a lower-middle-income group since 1999. India has been a lower-middle-income country since 2009.