Validity of Development Indicators

Question 1

What are the problems with development indicators?

Answer 1

• Development Indicators usually show an average figure for the whole country and often hide differences in the standard of living within a country.
• Average indicators can hide extremes within a country such as a rich minority and a poor majority.
• Using a single development indicator, such as Gross National Product (GNP) per capita, may fail to reflect accurately the true quality of life within a country.
• It is not possible to tell where a rise in GNP is being spent within a country- ie. defence spending rather than healthcare.
• Per capita indicators are expressed as dollars to allow comparison, but exchange rates continually fluctuate making it hard to generate consistent/reliable data.
• Most economic indicators do not take into account the informal economy which accounts for a large proportion of wealth generated in some countries.
• Development is not only about money, other aspects of development like literacy and healthcare are also important.

Question 2

What is the HDI

Answer 2

• To address the problem of using a single indicator or multiple indicators for comparing the development of countries, the United Nations uses the Human Development Index.
• Countries are ranked based on their score and split into categories that suggest how well developed they are.

Question 3

What factors are used to calculate the HDI?

Answer 3

• Life expectancy index
• Education index
• Mean years of schooling index
• Expected years of schooling index
• Income index