Table 2.2. Income thresholds for establishing stages of development

Countries falling in between two of the three stages are considered to be “in transition.” For these countries, the weights change smoothly as a country develops, reflecting the smooth transition from one stage of development to another. By introducing this type of transition between stages into the model—that is, by placing increasingly more weight on those areas that are becoming more important for the country’s competitiveness as the country develops—the index can gradually “penalize” those countries that are not preparing for the next stage. The classification of countries into stages of development is shown in Appendix 7.

[1] Competitiveness is a measure of a country's advantage or disadvantage in selling its products in international markets.

Competitiveness is the set of institutions, policies and factors that determine the productivity of the country.

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