The World Bank which lends money for improvements in underdeveloped nations

The world bank which lends money for improvements in

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can be evaluated by estimating the annual income earned per citizen. The World Bank, which lends money for improvements in underdeveloped nations, divides countries into four income categories:World Bank Group, “Country Classification,” Data: Country and Lending Groups, - classifications/country-and-lending-groups (accessed August 22, 2011). High income —$12,276 or higher (United States, Germany, Japan) Upper-middle income —$3,976 to $12,275 (China, South Africa, Mexico) Lower-middle income —$1,006 to $3,975 (Vietnam, Philippines, India) Low income— $1,005 or less (Kenya, Bangladesh, Haiti) Note that that even though a country has a low annual income per citizen, it can still be an attractive place for doing business. India, for example, is a lower-middle- income country, yet it has a population of a billion, and a segment of that population is well educated—an appealing feature for many business initiatives. The long-term goal of many countries is to move up the economic development ladder. Some factors conducive to economic growth include a reliable banking system, a strong stock market, and government policies to encourage investment and competition while discouraging corruption. It’s also important that a country have a strong infrastructure —its systems of communications (telephone, Internet, television, newspapers), transportation (roads, railways, airports), energy (gas and electricity, power plants), and social facilities (schools, hospitals). These basic systems will help countries attract foreign investors, which can be crucial to economic development. Currency Valuations and Exchange Rates If every nation used the same currency, international trade and travel would be a lot easier. Unfortunately, this is not the case. There are about 175 currencies in the world: Some you’ve heard of, such as the British pound; others are likely unknown to you, such as the manat , the official currency of Azerbaijan, a small nation in Southwest Asia. Let’s pretend you suddenly find yourself in Azerbaijan and all you have with you is a credit card (which none of the restaurants or hotels will take) and U.S. dollars (which no one wants either). How can you get some Azerbaijani manats so you can buy a good meal and check into a hotel? If it’s during the day, you’re in luck. Head to the closest bank and ask someone there who speaks English to exchange your dollars for Azerbaijan manats. If you give the bank clerk $300 (all of your travel money), don’t expect to get back 300 manats; the two currencies are not equal. To determine how much Azerbaijan money you’ll get in exchange for your $300, the bank clerk will look up the day’s foreign exchange rate 22 —which tells you how much one currency is worth relative to another currency . If today were 22. Value of one currency relative to another.

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