Q8 – Population in low-income countries

This question was asked to the public in Sweden, Norway, Finland, Denmark and the UK in the Sustainable Development Misconception Study 2020

In December 2020 Gapminder launches a brand new service for upgrading your worldview, where you will be able to take this (and many other) tests and become certified gapm.io/upgrader

Question

In 1990, 58% of the world’s population lived in low-income countries. What is the share today?

a) Around 9%

b) Around 37%

c) Around 61%

Correct answer

Today, only 9% of people live in low-income countries.

More are richer now

For most companies in most industries, global competition intensified during the past 30 years, because of something that most of them didn’t anticipate, and still haven’t fully realized. The majority of the world’s population moved from living in low-income countries to middle-income countries. Not by moving to a different country. But they moved their country’s average income by becoming richer.

Many people in used-to-be-low-income countries started manufacturing products and made money by successfully competing on the global markets, instead of being small-scale farmers like their parents used to be. They increased their incomes and thereby pushed up the GDP per capita, to the point where their countries were reclassified as middle-income countries. And it wasn’t just China, it happened in many big countries like India, Nigeria, Colombia, Indonesia, Brazil and Bangladesh. 

But even if the majority in these countries got richer, not everyone living there did. Today these new middle-income countries are still home to roughly half of the world’s extremely poor, living on less than $2/day, and the inequalities have become much much wider.

Data sources

This is based on the World Bank’s definition[1] of low-income countries based on their Gross National Income (GNI) per capita. Countries belong to the group if their income falls below a specific threshold, which increases slightly over the years, almost keeping pace with the inflation of the US dollar. In 1990, there were 54 countries below the threshold which was then $610. The total population of those countries was 3.1 billion, which was 58% of the world population of 5.3 billion, based on the population estimates from the UN Population Division[2]. In 2019, the threshold for being labeled as a low-income country had risen to $1026 [3]. Now only 29 countries have average incomes below that, and their combined population is 0.7 billion people, which is 9% of the world population of 7.6 billion. Among the 54 countries that were low-income countries in 1990, 25 have remained there, while 29 left the group and 4 additional countries dropped down to low-income, from previously being middle-income countries (among them Yemen and Syria).

The unit used for these GNI numbers is US Dollars converted from national currencies with the so called Atlas method [4], which uses the average exchange rate of the three recent years. This method of converting currencies doesn’t account for price differences and purchasing power differences, between countries. And national averages don’t express the income inequalities within countries which have been increasing in all these countries, as the income growth has been very unevenly distributed among the population. No matter what, a majority of people today have higher incomes than the majority in these countries had in 1990[5].

Source 1 – Classifying countries by income, the World Bank

Source 2 – UN World Population Prospects

Source 3 – New country classifications by income level: 2019-2020, the World Bank

Source 4 – World Bank Atlas Method

Source 5 – Gapminder Income Mountains


Date Posted: 2020-11-23