4.3.1 - Measures of development

Question 1

What are the characteristics of a developing country ?

Answer 1

• Low GN|
• Lack of human capital
• Lack of physical capital
• High population growth
• Lack of institutional structure
• High levels of primary product dependency

Question 2

What falls under a lack of human capital ?

Answer 2

• High levels of malnourishment
• Poor health and high mortality
• Low education and literacy rates

Question 3

What can a lack of physical capital lead to ?

Answer 3

Combined with the lack of human capital it can lead to high levels of both underemployment and unemployment

Question 4

Why might there be higher population growth in developing countries in comparison to developed countries ?

Answer 4

This is because there is lack of information and education for girls and women in terms of self protection and birth control

Question 5

What are the characteristics of a developed country ?

Answer 5

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

Question 6

What falls under large amounts of human capital ?

Answer 6

• Ability to afford nutritious food and maintain healthy diet
• High life expectancy
• High level of education and literacy rates

Question 7

What does economic development refer to ?

Answer 7

It refers to the improvement in peoples living standards over time

Question 8

What is economic development related to ?

Answer 8

• Poverty alleviation

No country can be considered to be developed if a substantial portion of its population is in poverty

Question 9

What are the different measures of development ?

Answer 9

• National income and output measures
• Human development index (HDI)
• Inequality adjusted human development index (IHDI)
• Multidimensional poverty index (MPI)
• Genuine progress indicator (GPI)

Question 10

What falls under national income and output measures ?

Answer 10

• GDP per capita at PPP
• GNI per capita at PPP

Question 11

What are the advantages of national income and output measures ?

Answer 11

• 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

Question 12

What are the disadvantages of national income and-output measures ?

Answer 12

• 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

Question 13

What is the Human Development Index (HDI) ?

Answer 13

The HDI is an index compiled by the UN that measures a country’s economic development/improvement of peoples lives

Question 14

What indices is the HDI made up of ?

Answer 14

• 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

Question 15

What do the HDI values range in-between ?

Answer 15

• 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

Question 16

What are the advantages of HDI ?

Answer 16

• 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

Question 17

What are the disadvantages of HDI ?

Answer 17

• 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

Question 18

What is the income-adjusted human development index (IHDI) ?

Answer 18

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

Question 19

How is the IHDI related to the HDI ?

Answer 19

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

Question 20

What is the multidimensional poverty index (MPI) ?

Answer 20

This measures the percentage of the population that are deemed poor and the degree of poverty experienced by those households

Question 21

Why does the MPI use ?

Answer 21

It uses data for health, education and standard of living but uses a broader range of indicators within these categories

Question 22

What are some downsides of the MPI ?

Answer 22

• 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

Question 23

What is the Genuine Progress Indicator ?

Answer 23

The GPI measures the improvement in economic welfare which are the costs associated with growth

Question 24

What are the three categories under the GPI ?

Answer 24

Economic

Social

Environmental

Question 25

Advantages of GPI and other comprehensive indicators

Answer 25

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

Question 26

Disadvantages of GPI and other comprehensive indicators

Answer 26

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