4.2 Measuring Development Chapter 28

Learning Objectives [4.2 Economic Indicators] Single indicators:344-349 Distinguish between GDP & GNI per capita figures (incl. PPP) for MDCs and LDCs. Compare and contrast two health (and two education) indicators for MDCs and LDCs. Composite indicators: p.349-353 State why composite indicators are better Compare & contrast the HDI figures for MDCs & LDCs. Explain why a country’s GDP/GNI per capita global ranking may differ from its HDI ranking.

Various statistics of Economic growth Note the usefulness of each (see 3.1) (and which are best for LDCs?) GDP – Gross Domestic Product The value of output produced within a country during a time period GNP/I – Gross National Product/Income The value of output produced within a country plus net income from abroad Real GDP Accounts for differences in price levels in different countries Real GDP per capita Takes account of the size of the population Real GDP per capita PPP Measures the purchasing power of a basket of goods in domestic currency after converting from USD.

How can the multidimensional nature of Economic Development be measured? How does one go about measuring these aspects? major aspects of development What possible statistic? Political freedoms Basic sustenance A clean, natural environment Access to health and education A “just society” A safe and secure country “A life that one has reason to value”

Examples of indicators: Link each indicator to an aspect/dimension of development Indicator: ratio of the richest 10% to lowest 10% Indicator: child dependency ratio Indicator: Agriculture as % of GDP Indicator: Electricity consumption per capita Indicator: Carbon dioxide emissions per capita Indicator: Daily supply of calories per capita Indicator: Internet subscribers per 1000 people

Human Development Index The HDI attempts to measure three aspects of human welfare (each weighted as 1/3 of the index) using 4 indicators: Health – life expectancy at birth component Education – mean of years of schooling for adults aged 25 years , expected years of schooling for children of school entering age Standard of living – GNI per capita (PPP$)

The indicators are then evaluated against the “ideal” statistic which is rated as 1.0. With all four indicators, the HDI is a value also between 0-1. The closer a country’s value is closer to one, the more developed the country is. The UN assigns value into 4 categories: data below are from the 2013 UNDR Very high human development  >0.9 High human development > 0.75 - < 0.9 Medium human development > 0.64 - < 0.75 Low human development < 0.5

Task: explain the validity of the four indicators for HDI Rephrase an indicator in your own words What assumption is involved that links it to its “aspect”? Explain why this aspect is a valid measure of human welfare Repeat steps 1-3 for the other four indicators

Task: compare Data http://hdr.undp.org/en/data/profiles/ Compare 2 medium HDI countries with 2 very high HDI countries in regard to: Two health indicators of your choice Two education indicators of your choice GNI/capita PPP and HDI Is your country an LDC? Justify your answer in a short paragraph.