4.3.1 - Measures of development Flashcards
define economic development
economic development is about improvements in living standards and quality of life
improvement in the quality of life and living standards show through measures of literacy, life-expectancy and health care outcomes
Define aid
Overseas development assistance from one country to another. Might take the form of humanitarian assistance, technical expertise and project aid etc
Define bric
The BRICS grouping – Brazil, Russia, India, China and South Africa – has
become short-hand for the rise of emerging markets in the global economy.
Define GDP
The total value of an economy’s domestic output of goods and services
so GDP per capita is just National income per head of population = total GDP / total population
define infrastructure
The transport links, communications networks, sewage systems, energy
plants and other facilities essential for the efficient functioning of a country
and its economy.
Define informal sector
The sector of the economy, normally comprising of small businesses,
which is unregistered with the tax authorities.
Define economic growth
an increase in the size of a countrys GDP
Define HDI
an index compiled by the UN that measures a country’s economic development, consisting of equally weighted indices measuring education, health and living standards
What does the HDI consist of
(max value at 85, min value at 25)) education: the mean years of schooling of a 25 year old and the expected years of schooling for a 5 year old
2) health: life expectancy at birth
3)income: as measured by real GNI per capita at purchasing power parity
How are the different components of HDI combined
Each of the three indicators is given equal weighting and a mean is taken to give a figure between 0 and 1. The higher the number, the greater the level of development.
What doesn’t the HDI include?
- income inequalty
- environment
- corruption and freedom
- crime and poverty
- education and health indices do not include quality/success of these outcomes; as well as the length of education, we need to look at literacy and numeracy levels to measure educational outcomes
Categories of development based on HDI
LOW: <0.550
MEDIUM: 0.550-0.699
HIGH: 0.700-0.799
VERY HIGH: > 0.800
Advantages of HDI:
- It takes into account three key factors which are important for the development of a
country to give broad measure so better than single indicators - allows for progress to be measured over time
-helps focus attention on developing countries - aid
disadvanatages of HDI
- should all the components be equally weighted - some argue that GNI per capita per PPP should have greater weighting as there is disagreement on which component is more important to quality of life in a country
+ so allocation of resources may no be as efficient
List other measures of development
- The Inequality-adjusted Human Development Index (IHDI):
- The Multidimensional Poverty Index (MPI):
- The Genuine Progress Indicator:
define IHDI
- The IHDI is the HDI adjusted for inequalities in the distribution of scores in each of the three dimensions of the HDI (health, education and income).
- The IHDI will be equal to the HDI value when there is no inequality, but falls below the HDI value as inequality rises.
IHDItakes into account inequalities within education etc
Define sustainable development
To leave future generations the option or capacity to be as well off as we are.
Define trickle down
The process whereby the economic gains from economic growth pass down throughout the entire society eventually giving rise to inclusive
development.
What is multidimensional poverty index
This measures the percentage of the population that is multi dimensional poor . It uses data for health, education and standard of living but uses a broader range of indicators within these categories.
How is MDPI measured
- Years of schooling and school attendance data is used for education;
- child mortality and nutrition data for health;
- availability of electricity, sanitation and safe drinking water in households, cooking fuel used, assets owned and the type of floor in a
house for standard of living.
evaluate MPI
- highlights the countries where some areas are extremely rich but where most of the
population is not and focuses on poverty . - However, it cannot be calculated for all
countries as the data is not always available . It also doesn’t take into account the
environment.
WHat is the genuine progress indicator
- It is calculated from 26 different indicators grouped into three main categories:
economic, environmental and social . - It aims to look at economic sustainability,
to ensure development does not limit the amount produced and consumed in the
future
what is included in GPI
- The economic category looks at personal consumption, inequality and the cost of
unemployment. - Environmental accounts for the cost of pollution, loss of natural areas, CO 2 emissions, ozone depletion and the depletion of non-renewable resources.
- In social, the 10 indicators range from the value of housework and parenting to the cost of crime and commuting to the value of volunteer work.
Evaluate Genuine progress indicator
- They tend to show developed countries experiencing negative growth over time, due
to their impact on the environment. - Some argue this proves that development is
unsustainable whilst others argue the index is biased and is constructed to prove
the anti-growth case. - figures like changes in electricity production or the numbers with a mobile phone per thousand of the population can show development levels. These are easier to calculate than indexes
single indicators of development
GDP per capita (gni),
health measures -life expectancy, infant mortality (shows level of jobs in healthcare, sanitation level, good health education on aids etc, access to hospitals)
- education measures (adult literacy rates, enrollment in primary education)
Define GNI
Gross National Income (GNI) is the final value of income flowing to a country’s owned factors of production in a given yea
Why use GNI over GDP capita
- if a large amount of national income derives from FDI, then it is likely the profit earnt from this leaves the country so GDP is higher than GNI as GNI only includes income flowing to the country’s FOP
- but use GNI at PPP to account for differences in cost of living between country as the value of currencies will vary greatly
Cons of GDP
- Many factors that affect living standards are not accounted for: corruption, environment, crime, education, health
- Increase in GDP can be detrimental, or not beneficial, to living standards e.g. pollution, repairing vandalism
- Unpaid activity e.g. child care not included
Income distribution not accounted for
Pros of GDP as a measure of economic development
- Gives an indication of living standards
- Vast majority of countries collect GDP figures so wide comparisons
- Can be refined into per capita and/or PPP to make it more representative
