Measures of Development Flashcards
Define economic development
An increase in living standards of an economy
(for essays)
An increase in real GNI per capita that results in higher living standards for a country’s population.
recall:
Define economic growth?
An increase in the productive capacity of an economy over time
3 reasons why GNI per capita
is a great form of measuring economic development and not
Yes:
1. Largely accurately; reflects the “average income” of households and includes households recieving from abroad
- data is widely available
No:
1. Inflation may distort data
- Does not indicate inequality as it is only average
- Does not include size of informal sector
Whats HDI
H.. D… I..
Health development index
Whats GNI
GDP + net income from abroad
Explain how HDI measure economic development
3 factors:
1. Health - Average life expectancy
2. Living Standards - Real GNI per capita
3. Education - Average years spent in schools
Advantages and Disadvantages of using HDI
as measurement of economic development
Ads:
1. holistic- it focuses on a range of indicators rather than just one, takes account of different benchmarks
- good for comparing countries - it makes it easy to see which countries are most developed and which are least developed
Ds:
1. unreliable - there are many indicators that it does not use, living standards and electricity in india (reasonable income but lack electricity stability)
- ignores inequality - the distribution of development which can be measured by looking at the gini coefficient (Norway and Israel)
how to measure HDI
(health x education x living standards)^1/3
What are other indicators of measurement of development in economy?
- IHDI (accounts inequality)
- MPI (multi-dimensional poverty index)