4 Measuring Development LEARNING OBJECTIVETO EXPLAIN THE DIFFERENT TYPES OF DEVELOPMENT INDICATORS AND HOW THEY ARE CALCULATED
5 Economic Indicatoris a statistic about the economy. Economic indicators allow analysis of economic performance and predictions of future performance
6 Examples of Economic Indicators GDP – Gross Domestic ProductThe value of output produced within a country during a time periodGDP/GNP per head/per capitaTakes account of the size of the populationGNI - Gross National IncomeThe total value of goods and services produced within a country together with the balance of income and payments from or to other countries.Real GDPAccounts for differences in price levels in different countries
7 Problems with using GDP/GNI Reliability of data?How accurate is the data that is collected?Distribution of income?How is the income distributed – does a small proportion of the population earn a high percentage of the income or is income more evenly spread? Quality of life?Can changes in economic growth measure changes in the quality of life?Does additional earnings power bring with it additional stress, increases in working hours, increased health and family problems?Impact of exchange rate?Difference in exchange rates can distort the comparisons – need to express in one currency, but which one and at what value?
8 Problems with using GDP/GNI Black/informal economy?Some economic activity not recorded – subsistence farming and barter activity, for exampleSome economic activity is carried out illegally – building work ‘cash in hand’, drug dealing, etc.Work of the non-paid may not be considered but may contribute to welfare – charity work, housework, etc.
10 Social Indicatorsare used to assess how well a country is developing in key areas such as health, education and diet. It is one way of finding out what is happening within a country.
11 Examples of Social Indicators Life Expectancy - is the average lifespan of someone born in that country. This can be affected by factors such as wars, natural disasters and disease. The higher the life expectancy the more developed the country.Birth Rate - Measures the number of babies born per thousand people per year. The higher this is, the less developed a country is supposed to be. The UK has around 13 babies born per year for every 1,000 people.Adult Literacy - Is the percentage of the adult population able to read and write.Infant Mortality - Measures the number of children who die before they reach the age of one for every thousand live births per year. The figure of 1000 is used so that countries of vastly different size can be compared.
12 THE HUMAN DEVELOPMENT INDEX The HDI measures a country in three basic dimensions of human development:A long and healthy life, as measured by LIFE EXPECTANCY at birth.Knowledge, as measured by the adult LITERACY rate (with two-thirds weight) and the combined primary, secondary, and tertiary GROSS ENROLLMENT RATION (with one-third weight).A decent standard of living, as measured by GROSS DOMESTIC PRODUCT (GDP) per capita at PURCHASING POWER PARITY (PPP) in $US.
13 Happy Planet Indexis an index of human well-being and environmental impact that was introduced by the New Economics Foundation (NEF) in July The index is designed to challenge well-established indices of countries’ development, such as GDP and the (HDI), which are seen as not taking sustainability into account.In particular, GDP is seen as inappropriate, as the usual ultimate aim of most people is not to be rich, but to be happy and healthy.