May 2016: The category of “Middle Income Countries” (MICs) should be replaced by “Middle Development Countries” (MDCs), suggests a report prepared for the UN Department of Economic and Social Affairs (DESA) by Adriana Erthal Abdenur, Igarapé Institute, Brazil. The report provides background information on MICs for the UN Economic and Social Council (ECOSOC) Dialogue on the longer-term positioning of the UN development system (UNDS) in the context of the 2030 Agenda for Sustainable Development.

The report, titled ‘Delivering the 2030 Agenda for Sustainable Development: The role of the UN development system in Middle-Income Countries,’ finds that UNDS lacks a systematic approach to MICs. Noting the lack of consensus within the UNDS on whether the income-based definition of MIC is useful, or how it should be used, the paper highlights that the MDC category would take into account other dimensions of development beyond income, as well as countries’ roles as political actors in the field of development.

The paper suggests that UNDS should pay closer attention to the heterogeneity within the MIC category, to allow for a more tailored approach across a variety of functions; upper MICs do not share the same needs as lower MICs and conflict-affected MICs. Instead of using the World Bank’s MIC category, the paper proposes four clusters of MDCs: Lower-MDCs, including countries that have been recently “promoted” into the World Bank category; those whose gains in poverty alleviation are highly vulnerable to reversals; and those whose World Bank categorization hides extremely imbalanced income distribution (e.g. Angola, Guatemala, Pakistan); Middle-MDCs, including countries that have achieved some poverty alleviation and human development gains without provoking sharp increases in inequality (e.g. Ecuador, Jordan, Namibia); Higher-MDCs, including countries that have combined poverty alleviation while implementing some measures to help ensure that those gains are not easily eroded by economic downturns, especially through institution- and capacity-building (e.g. Chile, Malaysia, Iran); and Conflict-affected MDCs, including countries whose development gains are substantially threatened by conflict and emergencies and thus subject to dramatic reversals in development, both in terms of well-being and with respect to infrastructure (e.g. Libya, Syria, Ukraine).

The report identifies three new challenges for the MICs posed by the 2030 Agenda. First, the broadened scope of the Sustainable Development Goals (SDGs) generates new and more ambitious demands, while MICs still face significant “unfinished business” from the Millennium Development Goals (MDGs). Second, the less favorable global economic context places new financial constraints on what can be done, as reflected in both UN financing and government budgets for national development. Third, rising of expectations from the international community regarding the responsibilities of some MICs, especially Higher-MDCs, as contributors to development, which places new political pressures on these countries.

Finally, the paper provides policy recommendations within the context of the ECOSOC Dialogue, such as: rethinking the MIC category; strengthening Official Development Assistance (ODA) support for MDCs; boosting capacity-building; providing support with regards to infrastructure; and strengthening South-South Cooperation through multilateral platforms. [Publication: Delivering the 2030 Agenda for Sustainable Development: The Role of the UN Development System in Middle-Income Countries] [IISD RS Story on ECOSOC Dialogue Meeting on MICs]