4.3.1 - Measures of development Flashcards
What are the characteristics of a developing country ?
- Low GN|
- Lack of human capital
- Lack of physical capital
- High population growth
- Lack of institutional structure
- High levels of primary product dependency
What falls under a lack of human capital ?
- High levels of malnourishment
- Poor health and high mortality
- Low education and literacy rates
What can a lack of physical capital lead to ?
Combined with the lack of human capital it can lead to high levels of both underemployment and unemployment
Why might there be higher population growth in developing countries in comparison to developed countries ?
This is because there is lack of information and education for girls and women in terms of self protection and birth control
What are the characteristics of a developed country ?
High GNI
Large amount of human capital
High levels of production, advanced technology and physical capital
Reliable and safe transport and infrastructure
Governments are democratically elected and not corrupt
Low levels of primary product dependency
What falls under large amounts of human capital ?
- Ability to afford nutritious food and maintain healthy diet
- High life expectancy
- High level of education and literacy rates
What does economic development refer to ?
It refers to the improvement in peoples living standards over time
What is economic development related to ?
- Poverty alleviation
No country can be considered to be developed if a substantial portion of its population is in poverty
What are the different measures of development ?
- National income and output measures
- Human development index (HDI)
- Inequality adjusted human development index (IHDI)
- Multidimensional poverty index (MPI)
- Genuine progress indicator (GPI)
What falls under national income and output measures ?
- GDP per capita at PPP
- GNI per capita at PPP
What are the advantages of national income and output measures ?
- Gives an indication of living standards
- Vast majority of countries collect GDP figures
- Can be refined into per capita and/or PPP to make it more representative
What are the disadvantages of national income and-output measures ?
- Many other factors that affect living standards are not accounted for
- Increase in GDP can be detrimental, or not beneficial, to living standards
- Unpaid activity not included
- Income inequality not accounted for
What is the Human Development Index (HDI) ?
The HDI is an index compiled by the UN that measures a country’s economic development/improvement of peoples lives
What indices is the HDI made up of ?
- Education
- Mean years of schooling for a 25 year old
- Expected years of schooling for a 5 year old
- Health
- Life expectancy at birth
- Living standards
- GNI per capita at PPP
What do the HDI values range in-between ?
- 0 and 1
The closer to 0 the lower the level of economic development
The closer to 1 the higher the level of economic development
What are the advantages of HDI ?
- Gives a much clearer picture than GDP alone
- It is simple to calculate and therefore more accurate and comprehensive
- Only uses quantitative indicators therefore there is less need for value judgements
What are the disadvantages of HDI ?
- It does not take into account the quality of life not the quality of teaching
- Does not take into account income inequality and poverty
- Does not include factors such as the environment and human rights
What is the income-adjusted human development index (IHDI) ?
Takes into account income inequality but does not take into account much else, so it is better than HDI but overall is not the best
How is the IHDI related to the HDI ?
The IHDI will be equal to the HDI value for a country when there is no inequality, but falls below the HDI value as inequality rises
What is the multidimensional poverty index (MPI) ?
This measures the percentage of the population that are deemed poor and the degree of poverty experienced by those households
Why does the MPI use ?
It uses data for health, education and standard of living but uses a broader range of indicators within these categories
What are some downsides of the MPI ?
- However, it can not be calculated for all countries as the data is not always available
- It also does not take into account the environment
What is the Genuine Progress Indicator ?
The GPI measures the improvement in economic welfare which are the costs associated with growth
What are the three categories under the GPI ?
Economic
Social
Environmental
Advantages of GPI and other comprehensive indicators
GPI and HDI do not take into account negative externalities of growth
Encourages policy makers to think broader in terms of economic welfare
Encourages long term planning
Disadvantages of GPI and other comprehensive indicators
Takes too long to measure them
Extremely difficult to collect accurate data
Many non economic variables such as value of leisure are subjective and it is difficult to assign an economic value to them
