Measures of Development

Question 1

Define economic development

Answer 1

An increase in living standards of an economy

(for essays)
A process which real GNI per capita incomes increased such that inhabitants of a country benefit from increased living standards.

Question 2

recall:
Define economic growth?

Answer 2

An increase in the productive capacity of an economy over time

Question 3

3 reasons why GNI per capita
is a great form of measuring economic development and not

Answer 3

Yes:
1. Increase in GNI -> average income increased, more jobs available

2. data is widely available

No:
1. Inflation may distort data

2. Does not indicate inequality as it is only average
3. size of informal sector?

Question 4

Whats HDI
H.. D… I..

Answer 4

Health development index

Question 5

Whats GNI

Answer 5

GDP + net income from abroad

Question 6

Explain how HDI measure economic development

Answer 6

3 factors:
1. Health - Average life expectancy
2. Living Standards - Real GNI per capita
3. Education - Average years spent in schools

Question 7

Advantages and Disadvantages of using HDI
as measurement of economic development

Answer 7

Ads:
1. holistic- it focuses on a range of indicators rather than just one, takes account of different benchmarks

2. 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)

2. ignores inequality - the distribution of development which can be measured by looking at the gini coefficient (Norway and Israel)

Question 8

how to measure HDI

Answer 8

(health x education x living standards)^1/3

Question 9

What are other indicators of measurement of development in economy?

Answer 9

1. IHDI (accounts inequality)
2. MPI (multi-dimensional poverty index)