Measures of Development

Question 1

What is Economic development about

Answer 1

About improvement in peoples living standards over time

Question 2

What does development require

Answer 2

Structural changes such as industrialisation and advanced technology

Question 3

Define economic growth

Answer 3

Increase in real output in an economy over a given time period

Question 4

Why is economic growth an essential part of economic development

Answer 4

Development can not take place without an expansion of resources available in a society

But the resources must be used efficiently

Question 5

Different measures of development

Answer 5

NI and Output measures (GDP per capita at PPP, GNI per capita at PPP)
HDI
IHDI (Inequality adjusted human development index)
Multidimensional poverty index

Question 6

What does HDI measure

Answer 6

Health
Education
Income

Question 7

HDI value for low level economic development

Answer 7

< 0.55

Question 8

HDI value for medium level of economic development

Answer 8

0.55-0.699

Question 9

HDI value for high level of economic development

Answer 9

0.7-0.799

Question 10

HDI level of very high economic development

Answer 10

> 0.8

Question 11

What did the HDI show there’s no automatic link between

Answer 11

Per capital income and human development

Question 12

Advantages of HDI

Answer 12

Much clearer picture than GDP
Simple to calculate
Education and health indicators show how successful government policies are in providing access to important merit goods
Only uses quantitative indicators

Question 13

Disadvantages of HDI

Answer 13

Does not take into account inequality and poverty

Does not take notice of the quality of life or quality and success of education

Corruption and environmental factors aren’t included

Question 14

What is the IHDI

Answer 14

HDI adjusted for inequalities in the HDI (Health, education and income)

Question 15

When will IHDI fall below HDI

Answer 15

When inequality rises

Question 16

When will IHDI equal HDI

Answer 16

When there is no inequality

Question 17

What is the MPI and what does it measure

Answer 17

Multidimensional Poverty Index

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

Question 18

What does the MPI use

Answer 18

Data for health, education and standard of living

Question 19

What does the MPI highlight

Answer 19

Countries where some areas are extremely rich but where most of the population is not and focuses on poverty

But it can’t be calculated for all countries as data is not always available - doesn’t take into account the environment

Question 20

What does the GPI measure

Answer 20

Improvement in economic welfare - costs associated with growth

Measures 26 indicators across 3 categories:
Economic
Environmental
Social

Question 21

Advantages of GPI

Answer 21

GDP and HDI doesn’t take into account negative externalities
Encourages policing makers to think in broader terms of economic welfare
Encourages long term planning

Question 22

Disadvantages of GPI

Answer 22

Takes too long to measure for it to be useful in policy decisions
Extremely difficult to collect accurate development - even more for LDCs
Measure non economic variables which are difficult to assign an economic value

Question 23

Evaluation of GDP

Answer 23

GDP alone is inadequate measure of welfare/development
Better to use all development measures together

Question 24

Difference between Economic Growth and Development

Answer 24

Economic Growth is concerned with an increase in a country’s productive potential

Economic Development is concerned with improvement in economic and social opportunities