Measures of Development
Economics: Edexcel A A Level, topic 8.2.1
Indicators of Development
Economic development is a much broader concept than growth. Economic development could cover hundreds of measures, such as access to internet coverage, access to clean drinking water, years of schooling and so on.
Human Development Index (HDI)
- The most popular measure is the Human Development Index (HDI).
- HDI is a composite index of life expectancy, education, and income indicators, which are used to rank countries.
- To calculate the HDI, the following variables are used:
- Life expectancy at birth (health).
- Mean years of schooling and expected years of schooling (education).
- Gross national income (GNI) per capita (PPP US$) (standard of living).
- Each item is equally weighted.
Limitations of HDI
- The HDI is not a comprehensive measure of human development.
- It just focuses on the basic dimensions of human development, excluding factors such as political freedom.
- It does not reflect the input efforts in terms of policies, nor can it measure short-term human development achievements.
- HDI is an average measure and so masks inequalities within countries.
- But it is important to keep it simple with minimum variables to make sure its acceptable, understandable and predictable.
Alternative measures
- The Indian economist Amartya Sen sees development as being concerned with improving the freedoms and capabilities of the disadvantaged to enhance the overall quality of life.
- While the standard set of freedoms could be around hunger, for example, you can also expand it to increasing political freedom, cultural and social freedom.
- For example, if a woman cannot vote or drive a car, her level of economic development is a lot lower than HDI or other measures would imply.
Test yourself on Measures of Development
Which of the following could be considered measures of economic development?
Which of the following is NOT considered when measuring HDI?
Which of the following is measured in the Human Development Index?