Q. How is the average income of any country calculated?
Answer: By dividing the total income of the country by its total population.
Notes: The income of the country is the income of all the residents of the country. This gives us the total income of the country. However, for comparison between countries, total income is not an useful measure. Since, countries have different populations, comparing total income will not tell us what an average person is likely to earn. Hence, we compare the average income which is the total income of the country divided by its total population. The average income is also called per capita income. In World Development Report 2006, brought out by the World Bank, this criterion is used in classifying countries. Countries with per capita income of Rs. 4,53,000 per annum and above in 2004, are called rich countries and those with per capita income of Rs. 37,000 or less are called low-income countries. India comes in the category of low-income countries because its per capita income in 2004 was just Rs. 28,000 per annum. The rich countries, excluding countries of Middle East and certain other small countries, are generally called developed countries.