4.3.1 - Measures Of Development

Question 1

What Are Characteristics Of Developing Countries?
(6 Points)

Answer 1

~ Low standards of living and low levels of income.

~ Low levels of productivity due to a lack of investment and the lack of capital.

~ Low levels of savings, due to poor paying jobs and lack of education causing a poverty trap.

~ High population growth, as they tend to give birth to more children to use as workers.

~ Primary sector dominance (Agriculture).

~ High unemployment and underemployment, due to low investment, only one sector dominance and a lack of education.

Question 2

What Is Economic Development?
(2 Points)

Answer 2

~ Sustainable increase in living standards for a country.

~ Typically characterised by increases in life span, education levels and income.

Question 3

What Is The Difference Between Economic Growth & Economic Development?
(2 Points)

Answer 3

~ Economic growth is about the productive capacity of a country.

~ Economic development is about progress in expanding economic freedoms and sustained improvements in economic and social opportunities.

Question 4

Why Is Economic Growth Good For Economic Development?
(3 Points)

Answer 4

~ Higher incomes, implies that jobs have been created, quality of life has increased and can also reduce income inequality.

~ Firms would make higher profits as confidence would improve, this means they are more likely to hire people, sales would increase due to higher incomes.

~ Produces a fiscal dividend, there would be higher income and corporation tax collection due to higher incomes and profits, this leads to spending on areas the promote development in the economy (Health, education and infrastructure).

Question 5

What Are Limitations Of Economic Growth On Economic Development?
(3 Points)

Answer 5

~ No guarantee of the distribution of income, can lead to income inequality and decrease in the standard of living.

~ Negative externalities due to more production E.g. Pollution, resource degradation and resource depletion, this leads to a loss of sustainability.

~ Growth may just be taking place in one sector, which doesn’t benefit the whole of society.

Question 6

Describe The Human Development Index (HDI)
(3 Points)

Answer 6

~ Measure of economic development calculated by the UN.

~ Composite indicator, and is a combination of 3 indicators (Health, Education and Income).

~ Each of these indicators are given equal weighting, with a mean taken to give a figure between 0 and 1.

Question 7

‘Health’ Is An Indicator Of The HDI, How Is It Measured?

Answer 7

Measured by life expectancy at birth.

Question 8

‘Education’ Is An Indicator Of The HDI, How Is It Measured?
(2 Points)

Answer 8

~ Measured by a combination of the mean years of schooling that 25 year olds have received, together with the expected years of schooling for a pre-school child.

~ Adult literacy and school enrolment.

Question 9

‘Income’ Is An Indicator Of The HDI, How Is It Measured?

Answer 9

Measured by GNI per capita at PPP.

Question 10

After Those Indicators Have Been Equally Weighted & Calculated A Figure Is Generated, What Does The Figure Generated Mean?
(6 Points)

Answer 10

~ Figure is generated between 0 and 1. 1 = Perfect development, 0 = No development.

~ The closer to 1, the higher the economic development.

Figures:
~ 0 -> 0.49 = Low development.

~ 0.5 -> 0.69 = Medium development.

~ 0.7 -> 0.79 = High development.

~ > 0.8 = Very high development.

Question 11

What Are The Advantages Of Using HDI As A Measure Of Development?
(4 Points)

Answer 11

~ Broad measure, takes into account 3 indicators which are important for development of a country so focuses on development outcomes.

~ Composite indicator, provides a more useful comparison than single indicators do.

~ Allows for progress to be measured over time and allows for comparisons between countries. E.g. Governments are able to look back in 10 years to see if their HDI has developed.

~ Provides citizens with an understanding of how their quality of life compares to other countries.

Question 12

What Are The Disadvantages Of Using HDI As A Measure Of Development?
(3 Points)

Answer 12

~ Doe not measure the inequality that exists.

~ Doesn’t take into account individual factors affecting each of the 3 indicators, making it hard to allocate resources. E.g. Quality and success of education or quality of life for health.

~ There are other factors which affect development which the HDI doesn’t take into account. E.g. Crime and poverty levels.

Question 13

What Are Some Single Indicators Of
Development?
(3 Points)

Answer 13

~ GDP Per Capita.

~ GNI Per Capita.

~ Heath measures.

~ Education measures.

Question 14

Describe ‘GDP Per Capita’ As A Single Indicator Of Development
(5 Points)

Answer 14

~ Average income per person.

Benefits:
~ Can be useful to give a blank measure of incomes.

Drawbacks:
~ Doesn’t tell us about other things such as pollution, negative externalities, e.t.c.

~ Developing countries attract more FDI due to abundant resources, MNCs operate here sending most of its profits back to the country of origin, so GDP per capita does not give an accurate figure.

~ Doesn’t tell us how far the money actually goes.

Question 15

Describe ‘GNI Per Capita’ As A Single Indicator Of Development
(3 Points)

Answer 15

~ Looks at the income generated by all the country’s FOPs.

~ Used more in developing countries, as lots of its FOPs may not stay in the country. E.g. Labour and migration.

Drawbacks:
~ Doesn’t tell us how far the money actually goes.

Question 16

Describe ‘Health’ As A Single Indicator Of Development
(3 Points)

Answer 16

~ Life expectancy, infant mortality.

~ If these measures increase overtime it indicates good development.

~ Implies that quality of services have increased, good education, good provision of jobs.

Question 17

Describe ‘Education Measures’ As A Single Indicator Of Development
(3 Points)

Answer 17

~ Adult literacy, enrolment in primary education.

~ If these measures increase overtime it indicates good development.

~ Implies that education is strong, teachers are getting jobs, potential for higher skilled jobs are improving, causing a fall in unemployment.

Question 18

What Are More Composite Indicators Other Than ‘HDI’ That Can Indicate Development?
(3 Points)

Answer 18

~ Inequality adjusted HDI (IHDI).

~ Multi-dimensional poverty index (MPI).

~ Genuine progress indicator.

Question 19

Describe The ‘IHDI’ As A Composite Indicator To Measure Development
(4 Points)

Answer 19

~ Created in 2010 to deal with the lack of information that HDI provides on inequality.

~ Measures the level of human development when inequality is accounted for.

~ The IHDI will be equal to the HDI value when there is no inequality, but falls below the HDI value as inequality rises.

~ Provides a greater insight into the differences in human development that exist in a country.

Question 20

Describe The ‘MPI’ As A Composite Indicator To Measure Development
(4 Points)

Answer 20

~ Measures complexities of poor peoples lives, individually and collectively each year.

~ Tracks deprivation across three dimensions and 10 indicators.

~ Identifies households as poor if they suffer deprivations across 1/3 or more of the weighted indicators.

~ It can focus in on regions, ethnicities and also any of the 3 dimensions making it a useful tool for policymakers and NGOs working to reduce poverty.

Question 21

Describe The ‘Genuine Progress Indicator’ As A Composite Indicator To Measure Development
(2 Points)

Answer 21

~ Calculated from 26 different indicators grouped into 3 main categories -> Economic, environmental and social.

~ Aims to look at economic sustainability to ensure development does not limit the amount produced or consumed in the future.