A country's GNI in local (national) currency is converted into U.S. dollars using the Atlas conversion factor, which uses a three-year average of exchange rates
to smooth effects of transitory exchange rate fluctuations, adjusted for the difference between the rate of inflation
in the country (using the country's GDP deflator
), and that in a number of developed countries
(using a weighted average
of the countries' GDP deflators in SDR
terms). The resulting GNI in U.S. dollars is divided by the country's midyear population to obtain the GNI per capita.
The World Bank
favors the Atlas method for comparing the relative size of economies, and uses it to classify countries in low, middle and high-income categories and to set lending eligibilities, in order to reduce short-term fluctuations in country classification.