The World Bank's classification system divides its 187 member countries into four categories: low income ($1,005 or less); lower middle income ($1,006 – $3,975); upper middle income ($3,976 – $12,275); and high income ($12,276 or more). Whether a country is low income (LIC) or middle income (MIC) affects many things, from eligibility for concessional lending from the multilateral banks, to donor aid policy, to trade access (low-income countries are more likely to have access to rich-world markets).
The system, however, presents a distorted picture. Using just one number - income per capita - to determine a country's status may be "convenient," as the World Bank puts it, but it produces results that do not reflect real-world situations. Ignoring issues such as inequality, human development, social exclusion, and government capacity - all of which matter tremendously to the robustness of states and the lives of the poor - does a disservice to the organizations and people who use the system.