global economy 4.8 - Measuring development

Question 1

define economic development

Answer 1

a qualitative measure of the country’s standard of living. It is a more multidimensional concept than economic growth as it involves reducing widespread poverty, reducing income inequalities and increasing employment opportunities.

Question 2

state the 5 single indicators of economic development

Answer 2

1. GDP/GNI per person (per capita) at PPP
2. Health and education indicators
3. economic/social inequality indicators
4. energy indicators
5. environmental indicators

Question 3

GDP/GNI per person (per capita) at PPP

Answer 3

GDP per capita - the total of all economic activity in a country, regardless of who owns the productive assets, divided by the number in the population

GNI per capita - the total income that is earned by a country’s factors of production, regardless of where the assets are located

Question 4

how does FDI affect GDP/GNI figures?

Answer 4

if a developing country has a large amount of FDI then its GDP figures will be significantly higher than its GNI figures, since they will include profits that may have been repatriated

for developed countries whose firms are heavily involved in FDI, the GDP figure will be significantly lower than the GNI figure

Question 5

how do remittances affect GDP/GNI figures?

Answer 5

worker remittances may be an important inflow of earnings for developing countries

Question 6

define PPP and explain how it is calculated

Answer 6

• attempts to equate the purchasing power of currencies in different countries
• it is calculated by comparing the prices of identical goods and services in different countries

Question 7

health indicators

Answer 7

• life expectancy as birth: the average number of years that a person may expect to live from the time that they are born.
• infant mortality rate: the number of deaths of babies under the age of one year per thousand live births in a given year.

These Indicate health care/services, clean water supplies/sanitation, food supplies, diets/lifestyles, poverty, conflict, etc.

Question 8

education indicators

Answer 8

• expected years of schooling (a measure of the years of schooling a child of school entrance age may expect to receive)
• mean years of schooling (a measure of the average years of schooling that have been received by those people in the economy who are aged 25 years and over)

Question 9

economic/social inequality indicators

Answer 9

measures in areas such as income and wealth distribution, pay inequality, asset ownership and access to credit

Question 10

energy indicators

Answer 10

access to electricity, the impact of energy bills on household budgets and the ability to maintain a home at an adequate temperature

Question 11

define energy poverty

Answer 11

the inability to maintain the home at an adequate temperature or to provide essential energy services to ensure decent living conditions

Question 12

environmental indicators

Answer 12

there are many, including air pollution, climate change, biodiversity, waste, water resources, etc

Question 13

state 4 composite indicators of economic development

Answer 13

1. human development index (HDI)
2. gender inequality index (GII)
3. inequality adjusted HDI
4. Happy planet index

Question 14

how is HDI measured?

Answer 14

• long and healthy life: life expectancy at birth
• improved education: mean and expected years of schooling
• standard of living: GNI per capita, converted at PPP US$

these 3 indicators are combined to give an index value between 0 and 1, with higher values representing a higher level of development (v high development = 0.800 and above)

Question 15

main advantage of HDI

Answer 15

more effective than the simple GDP figure

Question 16

disadvantages of HDI

Answer 16

• there are many different aspects to development other than the three included in the HDI
• HDI is an average figure that can mask inequalities within the country. these are likely to occur between rural/urban citizens, men/women, different ethnic groups

Question 17

how is the gender inequality index measured?

Answer 17

• reproductive health: measured by maternal mortality ratio and adolescent birth rates
• empowerment: measured by proportion of parliamentary seats occupied by females and proportion of adult females and males aged 25yo or older with at least some secondary education
• economic status: expressed as labour market participation and measured by labour force participation rate of female and male populations aged 15yo and older

the higher the GII, the greater the inequality

Question 18

why is gender inequality an issue?

Answer 18

women and girls are often discriminated against in such areas as health, education, political representation and labour market. this has a negative impact upon the development of their capabilities and freedom of choice.

Question 19

how is the inequality adjusted human development index measured?

Answer 19

• the IHDI is basically the HDI, but taking into account the human development costs of inequality
• each of the components of the HDI is adjusted downwards by its level of inequality
• if a country had perfect equality, then the IHDI value would equal the HDI value

Question 20

happy planet index

Answer 20

a measure of the ecological efficiency of delivering human well-being

• multiplying life satisfaction and life expectancy and dividing that by the ecological footprint
• the index is weighted to give progressively higher scores to nations with lower ecological footprints.

Question 21

describe the relationship between economic growth and economic development

Answer 21

• there is significant evidence that economic growth has enabled countries to raise millions of people out of poverty
• economic growth enables citizens to enjoy higher incomes and material standards of living
• this results in greater tax revenues for governments, which can be used to invest in development objectives suc as spending on health services, education and infrastructure
• however, it should not be assumed that growth always leads to development, or sustainable development