Measures of development

Question 1

HDI components with details

Answer 1

• Education: mean number and expected years of schooling
• Life expectancy: range of 25-85 years
• Standard of living: GNI at PPP to account for remittances and foreign aid and to reflex average income per person. It measures economic and social welfare of countries over time.

Question 2

Explain GNI and how it is measured

Answer 2

Standard of living is measured by GNI at PPP

GNI comprises the total value produced within a country (i.e. its GDP) together with its income received from other countries. Income index = (ln(GNIpercapita) – ln(100))/(ln(75000)-ln(100))

Question 3

How is HDI measured

Answer 3

HDI = cube root of (life expectancy index * education index * income index); geometric gives less emphasis to a extreme value

Question 4

Oil rich countries generally show _____ income equality

Ex-communist countries generally show ____ income equality

Answer 4

low

high

Question 5

Human poverty index measures

Answer 5

expectancy, education, and the ability of citizens to meet basic needs

Question 6

Two types of Human poverty index

Answer 6

• HPI-1: Measures poverty in developing countries; the longevity part of the index measures the probability of living to the age of 40. The education component considers the adult literacy rate. The ability of citizens to meet basic needs is measured by the percentage of underweight children and the percentage of people not using improved water sources
• HPI-2: Measures poverty in developed countries; the probability of not surviving to at least the age of 60 is used. The percentage of adults which do not have literacy skills is calculated, and poverty is calculated by those living below the poverty line i.e. below 50% of median income

Question 7

Average world HDI application

Answer 7

Average world HDI rose from 0.48 to 0.68 from 1970-2010 due to growth of East/South Asia, the Pacific (1=high level of economic development, 0=low level of development

Question 8

IHDI

Answer 8

The Inequality-adjusted HDI (IHDI) – HDI adjusted for inequalities in the distribution of achievements in each of three HDI components

Question 9

HDI measurement advantage

Answer 9

Measures are easy and cheap to collect
Measures are reliable

Comparisons between countries to be made to see which are more developed and it provides a much broader comparison between countries than GDP does.
Education and health are important development factors to consider and it can provide information about the country’s infrastructure and opportunities

Question 10

HDI measurement disadvantage

Answer 10

Does not include factors that may affect future living standards

In developing countries, the data may not be completely reliable

HDI doesn’t consider human rights, gender equality, political freedom, the environment (i.e. human development), income distribution (high HDI but still have poverty e.g. India)

Question 11

HDI usefulness advantage

Answer 11

HDI indicates whether GDP has been used to increase the standard of living

Takes into account the fact that there are other factors other than income that may improve human development

Question 12

HDI usefulness disadvantage

Answer 12

The HDI does not take into account qualitative factors
PPP values change very quickly so are likely to be inaccurate

The HDI simplifies and captures only part of what human development entails. It does not reflex on inequalities, poverty, human security, empowerment etc.

Question 13

GHDI

Answer 13

Gender-related Index (GHDI): measures the relative inequality between men and women. It combines HDI with a consideration of gender e.g. considers differences in life expectancies, income and education between genders. It stimulates proactive thinking and public policy to overcome systematic disadvantage of women, highlights areas in need of critical policy intervention

Question 14

HDI component:

Standard of living:

Answer 14

Living standards - GNIpc is used as an indicator of the living standards of an economy, the rationale being that all citizens would benefit from their country’s increased economic production. Major advantages to using GNIpc within the HDI are that it is measured frequently, widely and consistently. The UN compares GNI/capita according to their PPP in us dollars. This takes into consideration the different cost of living in different countries.

Question 15

HDI component:

Life expectancy
pro and con

Answer 15

Life expectancy – Average number of years a human has before death assuming constant health and living conditions. Life expectancy has improved over time due to improvements in technology, medicine, nutrition and sanitation.
Pro: Helps to show income equality as countries with high incomes with a lower HDI have higher income distribution
Con: HDI can vary within a country from place to place

Question 16

HDI component:

Education

Answer 16

Education – measured by mean years of schooling index for adults over 25: MYSI = MY/15 (15 is the projected maximum of this indicator for 2025); Expected years of schooling index for children of school entering age EYSI = EYS/18 as 18 is the age of achieving a master’s degree. Education index = (MYSI + EYSI)/2. Higher education gives someone more chances in live and therefore improves their standard of living. It is a lead variable because it can provide predictions about future education therefore future development

Question 17

Two other types of measures

Answer 17

• Access to clean water: subjective term ‘access’, basic necessity: key indicator of living standards
• Access to mobile phones per 1000 the population: not a clear indicator of health + living standards; allows a person to communicate, trade, pay money

Question 18

MPI

Answer 18

The Multi-dimensional Poverty index (MPI) - Shows number of people who are multi-dimensionally poor (suffering deprivations in a third of weighted indicators) and the number of deprivations with which poor households typically contend

Question 19

MPI Indicators

Answer 19

Indicators: Education (1/6 Years of Schooling, Child school attendance), Health (1/6 child mortality, nutrition), Standard of living (1/18 electricity, sanitation, drinking water, floor, cooking fuel, assets ownership)

Question 20

MPI pro and con

Answer 20

Pro of MPI: Governments can specifically target the factors that are responsible for creating the poverty in specific groups; uses greater range of indicators so more accurate
Con of MPI: measures are very subjective