Reconstruction of World Bank’s Classification of Countries

The main objective of this paper is to analyze if the classification of countries provided by World Bank (WB) can be reconstructed with a linear and/or integer programming model called Multi-Group Hierarchical Discrimination if only data published by WB are used. WB has a public database of countries containing economical-financial and political factors. The parameters of the model have been determined on a collection of 44 countries. The model has been verified on other 39 countries. Only four out of 39 countries were misclassified which shows the power the elaborated model. Logical Analysis of Data (LAD) also has analyzed the problem. The attempt of the reconstruction of the classification uses 19 indicators. An important by-product of the reconstruction is that the methods select the most important indicators. Interestingly, the result proves that the World Bank classification is not based only on GNI per capita. In addition, more criteria that are important have main role in classification of countries.