Measuring Economic Development

How can data help us? Compiling economic development data like you have done with one MDC and one LDC can be useful to economists. What are some of the ways that this data can be used by economists?

Making Economic Data Useful With economic data, economists can do the following: Monitor how a country is developing over time Make comparisons between/among countries Determine if a country is meeting it's goals Devise policies to deal with specific problems

Economic Indicators As you have seen from the data you collected, indicators help give us some insight as to where countries are in terms of economic development. As you may have seen also, these indicators are not without limitations. Not all countries have the resources to collect statistical data, some are not willing to make public this data, and there may be some ambiguity regarding what the statistics actually measure. While not perfect, economic indicators can be used as a rough guide when comparing the economic development of countries

Which data to use?

World Development Indicators One set of indicators relating to economic growth and development comes from the World Bank. The WDIs provide statistical data on: people (population, employment, poverty, education, health) environment (land use, energy production, emissions) economy (trade, balance of payments, government finance) states and markets (tax policies, defense spending, i.t.) global links (aid, migration, travel and tourism)

Millennium Development Goals In 2000, 189 countries adopted these goals with targets to be reached within 15 years. 8 goals and various targets and indicators were agreed upon. Can you guess what they are?

The 8 Goals 1. Eradicate poverty and hunger 2. Achieve universal primary education 3. Empowerment of women 4. Reduce child mortality 5. Improve maternal health 6. Fight HIV/AIDS, malaria and other diseases 7. Ensure environmental sustainability 8. Develop a global partnership for development

Taking a closer look at the 8 goals The countries that met at the U.N. to set up these goals realized how challenging the work ahead was. With some goals, such as eradicating poverty, reducing child mortality, and combatting diseases, the goals were to reduce by anywhere between 50%-75% by The campaign continues.

Health Indicators Take a look at the handout I have, or should have, just given you. It lists countries in order of GDP per capita and then shows how each country performs with regards to a few health indicators. Do you notice some surprising data in this chart?

Questions to consider Why might Costa Rica have a higher life expectancy than the U.S.? How do you explain the relatively low life expectancy in Saudi Arabia when compared with Sri Lanka and Armenia? Why do the Sub-Saharan Africa countries have such a low life expectancy? Why does Moldova have a higher life expectancy than Russia? Why does the U.S. have a relatively high rate of infant and maternal mortality?

Income Poverty Extreme poverty--living on less than US $1.25 per day Moderate poverty--living on less than US $2 per day As of 2008, 1.4B live in extreme poverty, 2.6B live in moderate poverty. Some progress has been made lifting people from these levels of poverty, but results vary across regions. East Asia/Pacific has shown the most improvement, while Sub- Saharan Africa continues to struggle more than any other region. India has the largest number of people (approx. 450M) living in extreme poverty. (42%)

Income Distribution The opposite side of the handout I have given you addresses income distribution, literacy, and access to clean water and sanitation. Which countries seem to have the most/least equal distribution of income? Do any particular regions seem to have greater unequal distributions of income than others? Is there a clear relationship between GDP per capita and the degree of income inequality?

Literacy, Water, and Sanitation Which region does best on literacy? Why is this so? Why might the Middle East/North Africa region have low literacy rates? How do literacy, clean water and sanitation relate to economic growth? What can you say about Tajikistan's performance in these areas?

Dependency Ratio As you know, the dependency ratio tells us the number of people over 65 and below 15, compared to the population as a whole. Countries with high dependency ratios must devote more income and resources to care for these members of society. Low income countries with their higher birthrates typically have higher dependency ratios, thus hindering economic growth

Three Sectors of Economic Activity Another important indication of economic growth and development is what type of economic activity occurs in a country. LDCs continue to focus on primary sector work, while the MDCs are involved in the tertiary sector.

The Human Development Index

Human Development Index As you have seen with your research, the HDI measures human development in three measures: 1. life expectancy 2. literacy 3. GDP per capita Developed by the UNDP, countries are ranked on a scale from 0-1, with the higher number indicating a better standard of living. The HDI can help countries form policies but it too has its shortcomings.

Human Poverty Index (HPI) This index looks more at human poverty than income poverty. It refers to deprivations and the lack of opportunities that allow individuals to lead a long, healthy life with a decent standard of living, freedom and dignity. The HPI sets higher goals for MDC countries. Countries like Turkey and South Africa have greater human poverty than income poverty Countries like Costa Rica, Colombia and India have greater income poverty than human poverty.

The Gender-Related Development Index (GDI) This index is similar to the HDI but is adjusted to reflect the inequalities between women and men in each of the three categories.

The Gender Empowerment Measure (GEM) This index measures gender inequalities in LDCS, focusing on: political participation and decision making by gender distribution of jobs as legislators, managers, and professional/technical positions by gender power over economic resources, measured by income earned by gender

Discussion Questions 1. Why is GDP per capita a poor indicator of levels of welfare or levels of economic and human development? 2. How can countries around the world do more to promote the welfare of their populations through a reallocation of resources, even in the absence of economic growth? 3. Which economic development issues do you think are most difficult to improve upon? Why? 4. How likely is it that the Millennium Development Goals are met by 2015? Will they ever be met? 5. Which Millennium Development Goal do you think must be addressed most urgently? Why?

Coming Soon! AD/AS Revision! But first, a quiz!