Ch 2 - Growth, Development And Happiness Flashcards
What is ‘growth’ in economics?
growth is quantitative progress.
An increase in economic variables over a period of time is economic growth. The term can be used in an individual case or in the case of an economy or for the whole world.
Examples are:
(i) An economy might have been able to see growth in food production during a decade which could be measured in tonnes.
(ii) The growth of the road network in an economy might be measured for a decade or any period in miles or kilometres.
(iii) Similarly, the value of the total production of an economy might be measured in
currency terms which means the economy is growing.
(iv) Per capita income for an economy might be measured in monetary terms over a period.
What is ‘development’ in economics?
The development indicates the quality of life in the economy.
Development variables such are:
(i) The level of nutrition
(ii) The expansion and reach of healthcare facilities—hospitals, medicines, safe drinking water, vaccination, sanitation, etc.
(iii) The level of education
(iv) Other variables on which the quality of life depends
What is the relationship between Growth and Development?
quantitative as well as qualitative progress
Before assuring development we need to
assure growth. Higher economic development requires higher economic growth. But it does not mean that a higher economic growth automatically brings in higher economic development.
What are 3 cases of growth and development? With examples
(i) Higher growth and higher development
Scandinavian countries.
(ii) Higher growth but lower development
Gulf countries. These economies, though they had far higher levels of income and growth, levels of development were not of comparable levels.
Developing countries like India, Brazil, SA.
(iii) Lower growth but higher development
The USA.
How is development measured?
Human Development Index (HDI) is used to measure development.
It consists of Health, Education and
Standard of Living—converted into a composite human development index
Measured as goalposts, expressed as a value between 0 and 1.
Education is measured in
(i) Mean of years of schooling (for adults aged 25 years): This is estimated based on educational attainment data from censuses and surveys available in the UNESCO Institute for Statistics database and Barro and Lee (2010) methodology.
(ii) Expected years of schooling (for children of school entering age): These estimates are based on enrolment by age at all levels of education and population of official school age for each level of education. Expected years of schooling is capped at 18 years.
The Health component is measured by the life expectancy at the birth component of the HDI and is calculated using a minimum value of 20 years and a maximum value of 83.57 years.
The Standard of Living component is measured by GNI (Gross National Income/Product) per capita at ‘Purchasing Power Parity in US Dollars (PPP $) instead of GDP per capita (PPP $) of past. The goalpost taken for minimum income is $100 (PPP) and the maximum is US $87,478 (PPP), estimated for Qatar in 2012.
Which other factors does HDI overlook?
(i) cultural aspects of the economy,
(ii) outlook towards aesthetics and purity of the environment,
(iii) aspects related to the rule and administration in the economy,
(iv) people’s idea of happiness and prestige,
(v) ethical dimension of human life, etc.
How is happiness measured?
Gross National Happiness, GNH is measured as:
(i) Higher real per capita income
(ii) Good governance
(iii) Environmental protection
(iv) Cultural promotion (i.e., inculcation of ethical and spiritual values in life without which, it says progress may become a curse rather than a blessing)
World Happiness Report, WHR is measured on:
(i) GDP per capita (at PPP)
(ii) Social support (someone to count on)
(iii) Healthy life expectancy at birth
(iv) Freedom to make life choices
(v) Generosity
(vi) Perception of corruption
