Concept Indicators and

UNIT 1 CONCEPTS INDICATORS AND Measurement

MEASUREMENT
Structure
1.0 Objectives
1.1 Introduction
1.2 Economic Growth: Concept and Measurement
1.2.1 Concept of Economic Growth
1.2.2 Total Output and Output Per Capita
1.2.3 Comparison across Space and Time
1.3 Economic Development and its Indicators
1.4 Characteristics of Developing Nations
1.4.1 Low Per Capita Income
1.4.2 Low Manufacturing Base
1.4.3 Other Features
1.5 Development and Welfare
1.6 The Millennium Development Goals and the Sustainable Development
Goal
1.6.1 The Millennium Development Goals
1.6.2 The Sustainable Development Goals
1.7 Let Us Sum Up
1.8 Answers to Check Your Progress Exercises

1.0 OBJECTIVES
The aim of this unit is to acquaint you with the concepts, indicators and
measurement of economic growth and development. After studying this unit, you
should be able to:
 Explain what economic growth means
 Discuss how economic growth is measured
 Explain the meaning of economic development
 Discuss how development differs from economic growth; and
 Analyse the relationship among the concepts of development and wellbeing

1.1 INTRODUCTION
This first unit begins your study of the economics of development. You have
studied microeconomics and macroeconomics courses that have equipped you
with concepts and techniques that will help you to understand and gain insights
from a study of economic growth and development. Traditionally, from the time
of Adam Smith, economics was a study of economic growth and development of


Shri Saugato Sen, Associate Professor, IGNOU, New Delhi
7
Growth and nations. The title of Adam Smith’s most well-known book, published in 1776
Development
was An Inquiry into the Nature and Causes of Wealth of Nations. Even Karl
Marx contended that his aim was to “study the laws of motion of society”. It was
with the rise of neoclassical Marginalist School that economists shifted their
attention to the study of resource allocation and production, consumption and
exchange at a point of time. Economics focussed on static analysis.
After World War II ended, and European countries had to be rebuilt and put back
on the growth path, economic growth again became a field of study in
Economics.At the same time many formerly colonised economies became
independent. There was a need to understand these economies to suggest ways
and policies for economic development. The study of economic growth also
became subsumed to a large extent within Macroeconomics, while the study of
economic development of the developing nations came to be called Development
Economics or the Economics of Development. Growth Theory also emerged as a
field of study.
This unit aims to begin your acquaintance with the concepts of Development
Economics. The unit discusses the meaning of economic development and how it
differs from growth; what the components of economic development are; what
the relation of development with welfare is; what are the indicators of
development, and so on. The unit begins by explaining the concept of growth and
how growth is measured. It explains how income levels can be compared across
time, and of different countries. Next, the unit takes up for discussion the main
topic of this unit, that is, the meaning of economic development. In doing so, it
explains the characteristics of developing countries, and what it is that makes
them known as ‘developing’ rather than ‘developed’ nation. The unit stresses that
basically, economic development is a much wider concept than economic
growth, that it is multidimensional, and that it is ultimately about the people of a
country or region. The unit finally talks about the relation between development
and wellbeing.

1.2 ECONOMIC GROWTH: CONCEPT AND

MEASUREMENT
Any discussion about economic development has to begin with economic growth.
In this section we look at the concept of economic growth and how it is
measured.

1.2.1 Concept of Economic Growth

Economic growth can be defined as “an increase in real terms of the output of
goods and services that is sustained over a long period of time, measured in
terms of value added.” The term economic growth refers to increases over time
in a country's real output of goods and services. Output is generally measured by

8
gross or net domestic product (GDP or NDP), though other measures can also be Concept Indicators and
Measurement
employed. Two points, as follows, need be noted in this definition:
 Economic growth is essentially a dynamic concept and refers to a
continuous increase in output. The word ‘dynamic’ here denotes a process
taking place over time. This is contrasted with ‘static’ which does not so
much mean ‘unchanging’ as ‘at a point in time’. Forces that generate growth
generate a positive rate of change from a lower to a higher level of output
may be welcome but that is not growth.
 We ought strictly to distinguish between output and output capacity. Most
theories of growth, in so far as they with increases in labour forces or the
accumulation of capital, implicitly deal with changes in output capacity,
whereas actual changes in output over time are also influenced by the ability
of an economy to utilise accumulated capacity.
 Process of economic growth is essentially a dynamic concept and refers to a
continuous expansion in level of output, i.e. it refers to forces that generate a
positive rate of change over time and not the forces that lead to discrete (or
one shot) change from a lower to higher level of output which are temporary
and short lived.
The concept of the growth rate is very important and you thoroughly need to
understand it.
Let x be an economic variable. Let x0 be the initial value x1 be the subsequent
value. The proportional change in going from x0 to x1 is simply
x1 − x0 = Δx/x0 x0
The percentage change in going from x0 to x1 is simply 100 times the
proportionate change:
% Δ x = 100 ( Δ x/x0)
If we assume a constant rate of growth, the formula used for calculating the
growth rate for more than one year is as follows:
1.2.2 Total Output and Output Per Capita
The term ‘output’ is ambiguous, in that it can mean either total output or output
per capita. An increase in total output is ‘extensive growth’ (when population
and production increase at about the same pace). When one thinks of growth in
the context of an increase in standards of living or of the welfare of a population,
one naturally thinks of output per head of population. However, an increase in
total output over time may also be an extremely significant phenomenon, where,
for example, economies of scale are important. The term output expansion,
however, is subject to ambiguity in the sense that does it mean growth in total
output or growth in output per capita. An increase in the former is referred to as
9
Growth and ‘extensive’ growth whereas an increase in the latter is called the ‘intensive’
Development
growth. The latter one is important in the context of increase in the standards of
living of the population of the country whereas the former is extremely
significant when one wants to examine the aggregative phenomenon such as
economies of scale etc.
1.2.3 Comparisons across Space and Time
Another measurement issue we need to consider is how to compare levels of
GDP per capita across countries. The problem arises because each nation
measures national income in its own currency. Economic growth rates can
be computed in a nation’s own currency, but if we want to understand better
what is required to transform a nation from low to high income, it is useful
to compare nations at different income levels. To do so requires converting
GDP per capita into a common currency. The shortcut to accomplishing
this goal is to use the market exchange rate between one currency, usually
U.S. dollars, and each national currency. One problem with converting per
capita income levels from one currency to another is that exchange rates,
par- ticularly those of developing countries, can be distorted. Trade
restrictions or direct government intervention in setting the exchange rate
make it possible for an official exchange rate to be substantially different
from a rate determined by a competitive market for foreign exchange.
But even the widespread existence of competitively determined market
exchange rates would not eliminate the problem. a significant part of
national income is made up of what are called nontraded goods and
services—that is, goods that do not and often cannot enter into
international trade. Generally speaking, whereas the prices of traded goods
tend to be similar across countries (because, in the absence of tar- iffs and
other trade barriers, international trade could exploit any price differences),
the prices of nontraded goods can differ widely from one country to the next.
This is because the markets for nontraded goods are spatially separated
and the underly- ing supply and demand curves can intersect in different
places, yielding different prices.
Exchange rates are determined largely by the flow of traded goods and
international capital and generally do not reflect the relative prices of
nontraded goods. As a result, GDP converted to U.S. dollars by market
exchange rates gives misleading comparisons of income levels if the ratio
of prices of nontraded goods to prices of traded goods is different in the
countries being compared. The way around this problem is to pick a set of
prices for all goods and service prevailing in one country and to use that set of
prices to value the goods and services of all countries being compared. In
effect, one is calculating a purchasing power parity (PPP) exchange rate.
To compare income across time, the choice of an appropriate price
deflator has to be thought of. There are also issues of constructing an
adequate index number to compare the current year income with the
income in a suitably chosen base year.
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 Concept Indicators and
1.3 ECONOMIC DEVELOPMENT AND ITS Measurement
INDICATORS
Economic growth is a necessary but not sufficient condition for improving
the living standards of large numbers of people in countries with low levels of
GDP per capita. It is necessary because, if there is no growth, individuals can
become better off only through transfers of income and assets from others.
In a poor country, even if a small segment of the population is very rich, the
potential for this kind of redistribution is severely limited. Economic growth,
by contrast, has the potential for all people to become much better off
without anyone becoming worse off. Economic growth has led to
widespread improvements in living standards in Botswana, Chile, Estonia,
Korea, and many other countries. The modern economists, however, question
this identity between ‘economic growth’ and ‘economic development’;
development is not the same as growth. Suppose, by analogy, we were interested
in the difference between ‘growth’ and ‘development’ in human beings. Growth
involves change in overall aggregates such as height or weight, while
development includes changes in functional capacity, of ability to adapt to
changing circumstances. Growth is an engine, not an end in itself. The end is
development.
The traditional concept of viewing economic development as synonymous with
economic growth was based on what came to be known as the ‘trickle-down
strategy’, which implies that the effects of rising incomes and output would
ultimately trickle down to the poor so that they would benefit poor as well as the
rich. The modern economists reject this view and stress the need for strategies
designed to meet the needs of the poor directly. Hence, economic development
has come to be redefined in terms of the reduction or elimination of poverty,
inequality, and unemployment within the context of a growing economy.
“Redistribution from growth” has become an accepted paradigm. Prof. Dudley
Seers poses the basic question about the meaning of development very clearly
when he states:
The questions to ask about a country’s development are therefore: what
has been happening to poverty? What has been happening to
unemployment? What has been happening to inequality? If all three of
these have declined from high levels then beyond doubt this has been a
period of development for the country. If one or two of these central
problems have been growing worse, especially if all three have, it would
be strange to call the result “development” even if per capita income
doubled.
Economic development, in its essence, must represent the whole gamut of change
by which an entire social system, tuned to the diverse basic needs and desires of
individuals and social systems within that system, move away from a condition
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Growth and of life widely perceived as unsatisfactory towards a situation of life regarded as
Development
materially and spiritually “better”.
If economic growth does not guarantee improvement in living standards, then
GDP per capita may not be a meaningful measure of economic development.
In addition to problems associated with how income is spent and distributed,
any definition of eco- nomic development must include more than income
levels. Income, after all, is only a means to an end, not an end itself. If
economic growth and economic development are not the same thing,
how should we define economic development? Amartya Sen, economist,
philosopher, and Nobel laureate, argues that the goal of development is to
expand the capabilities of people to live the lives they choose to lead.
Income is one factor in determining such capabilities and outcomes, but it is
not the only one. To be capable of leading a life of one’s own choice requires
what Sen calls “elementary functionings,” such as escaping high morbidity
and mortality, being adequately nourished, and having at least a basic
education. Also required are more complex functionings, such as achieving
self-respect and being able to take part in the life of the community.
Income is but one of the many factors that enhance such individual
capabilities.
In view of the above considerations economic development is now being defined
“as the process of increasing the degree of utilisation and improving the
productivity of the available resources of a country which leads to an increase in
the economic welfare of the community by stimulating the growth of national
income”.
It follows from this definition that the progress of development has to be assessed
by reference to two separate indicators, namely, (i) the indices of ‘production’ or
GDP, and (ii) the indices of ‘economic welfare’ of the community. The former
covers what may be called the ‘growth’ aspects of development.
So defined, the concept of economic development emphasises the achievement of
the following three objectives:
 To increase the availability and widen the distribution of basic life sustaining
goods such as food, shelter and protection. This, however, would be possible
with a fast increase in real per capita income.
 To raise standards of living including, in addition to higher incomes, the
provisions of more goods, better education and greater attention to cultural
and humanistic values, all of which will serve not only to enhance material
well-being but also to generate individual and national self-esteem.
 To expand the range of economic and social choice to individuals and
nations by freeing them from servitude and dependence not only in relation
to other people and nation-states, but also to the forces of ignorance and
human misery. Economic development is to be assessed ultimately by the
enhancement of the ‘positive freedom’.
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In view of the above three objectives, the quality of life is regarded as an Concept Indicators and
Measurement
important index of development. It is contended that such quality is not
adequately reflected in the index of per capita income growth. Several factors are
involved in the measurement of such ‘quality’; some of these factors are non-
monetary, while others can be measured in money terms. There is a need to set
up a synthetic index of these different factors to measure economic development
and quality of life.
. We may note the following as important changes:
 Constituents of GDP Change: More generally, in terms of percentage
shares, saving rates increase as income grows, government revenues (and
expenditure) increase, food consumption drops and non-food consumption
increases, out of services – and, of course, also industry – increases, while
agriculture falls.
 Employment Changes: Employment changes reflect the shift in output and
changes in productivity. Labour in the primary sector of the economy does
not fall as rapidly as its share in output, the reverse is true for employment in
industry where increase in labour productivity is more easily secured.
 Shift in the Composition of Exports: As development proceeds, exports
will account for a larger proportion of income and there will have been a
marked shift in the composition of exports, so that the value of export of
manufactures rises relative to that of primary products. Imports will also
have risen and earnings and payments will be roughly balanced.
 Rate of Increase in Population: As incomes increase, the rate of increase in
population may be expected to fall, as the birth rate declines along with a fall
in the death rate. The population would still be increasing, but gradually the
rate of growth will tend to peter out.
Distribution of income: Income would at first become more unequally
distributed and then this trend would be reversed. You will read more about this
and on what is called the Kuznets ‘inverted U curve’ in Block 3 in the unit on
inequality
Economic development is a broad term that does not have a single, unique
definition.
 Life sustaining goods and services: To increase the availability and
widen the distribution of basic life-sustaining goods such as food, shelter,
health and protection.
 Higher incomes: To raise levels of living, including, in addition to higher
incomes, the provision of more jobs, better education, and greater
attention to cultural and human values, all of which will serve not only to
enhance material well-being but also to generate greater individual and
national self-esteem

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Growth and  Freedom to make economic and social choices: To expand the range of
Development
choices available to individuals and nations by freeing them from
servitude and dependence not only in relation to other people and nation-
states but also to the forces of ignorance and human misery.
Dudley Sears has defined development as “the reduction and elimination of
poverty, inequality and unemployment within a growing economy”.
The Nobel Economist Amartya Sen in his 1998 Nobel address, identified four
broad factors, beyond mere poverty, that affect how well income can be
converted into “the capability to live a minimally acceptable life”:
• Personal heterogeneities: including age, proneness to illness, and extent of
disabilities.
• Environmental diversities: shelter, clothing, and fuel, for example, required
by climatic conditions.
• Variations in social climate: such as the impact of crime, civil unrest, and
violence.
• Differences in relative deprivation: for example, the extent to which being
impoverished reduces one’s capability to take part in the life of the greater
community.
According to Sen, economic development requires alleviating the sources of
“capability deprivation” that prevent people from having the freedom to live
the lives they desire.
In his book Development as Freedom, Sen sees development as being concerned
with improving the freedoms and capabilities of the disadvantaged, thereby
enhancing the overall quality of life. Sen pursues the idea that development
provides an opportunity to people to free themselves from the suffering caused
by
• Early mortality
• Persecution
• Starvation
• Illiteracy

Development should be about increasing political freedom, cultural and social

freedom and not just about raising incomes.
There can be several indicators to consider when taking a broad look at the
process of economic development, such as:
 Risk of extreme poverty - % of the population living on less than $1.25
per day (PPP)
 The percentage of adult male and female labour in agriculture, % of
arable land that is cultivated

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  Combined primary and secondary school enrolment figures and other Concept Indicators and
Measurement
indicators of progress in building human capital. Access to clean water /
improved sanitation facilities (% of population with access)
 Energy consumption per capita
 Depth of hunger, kilocalories per day per capita
 Prevalence of HIV, average life expectancy at birth, years of healthy life
expectancy, child mortality
 Access to mobile cellular phones per thousand of the population
 Percentage of the population living in extreme poverty
 Dependence on foreign aid / levels of external debt
 Percentage of households with a bank account
 Unemployment rates and vulnerable employment rates
 High-technology exports (% of manufactured exports)
 The Human Development Index
 The multi-dimensional poverty index
In block 3 of this course, and in course BECC 114, you will be introduced to
the Human Development Index
Check Your Progress 1
1) What is the definition of Economic Growth?
…………………………………………………………………………………
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2) Distinguish between economic growth and economic development.
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3) What type of structural changes take place in an economy as it develops?
………………………………………………………………………………
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Growth and
Development
1.4 CHARACTERISTICS OF DEVELOPING
NATIONS
We have seen what development means. We have also seen how it is different
from economic growth. Now, there are certain nations that are known as
developed nations, and certain nations that are called developing. What is the
difference between developed and developing nations. To say that developed
nations have a higher level of development begs the question, what does that
mean? What do we understand by a “higher level of development? Although
these questions shall be answered in greater detail in the next unit, in this unit we
look at certain characteristics that are evident in most of the developing nations.
In the next unit, we shall see there are finer sub-classifications among the
developing nations. For now, let us discuss some of the common characteristics
that most developing nations display.
1.4.1 Low Per Capita Income
Most of the developing nations have a lower per capita income than developed
nations. Some developing nations may have a high gross domestic product level
but the income per head tends to be low. one of the most commonly acceptable
criteria of underdevelopment is the low per capita real income of
underdeveloped countries as compared with the developed countries. Added
to this is low level of physical capital and low capital to worker ratio. Developing
nations also tend to low productivity and sometimes lower levels of technology.
Moreover, developing nations show high levels of poverty, low indices of human
development, very high inequality of income as well as assets, and
unemployment—structural, cyclical and disguised.
1.4.2 Low Manufacturing Base
One of the characteristics that we see about developing nations is that much of
the gross domestic product is accounted for by agriculture and sometimes,
services too, but the manufacturing sector is not so developed. Industries are not
widespread and diversified. Much of production and employment is in the
unorganized sector. Much of it stems from low capital and low investment.
Savings are often low too because of low income. Low savings lead to low
investment, which further leads to lower income. This has sometimes been called
the vicious cycle of poverty, if the income and capital accumulation range was
really low. High rates of industrial growth has been a characteristic feature of
those countries that have moved to a higher development level or even moved
from being a developing towards becoming a developed nation.
1.4.3 Other Features
Several developing nations have displayed some other features that are common
to many of these countries. Often population rates of growth and fertility levels in
these countries are high. This creates pressure on the resources and output of the
country. Secondly level of urbanization is low, and a large proportion of the
16
people resides in rural areas. In production, there is often an economic dualistic Concept Indicators and
Measurement
structure with a low-wage low productivity rural and agricultural sector and a
smaller more productive higher-wage manufacturing sector, often located in
urban and semi-urban areas. Often there is migration from low-wage rural areas
to urban areas because of rural-urban wage gap. Often those migrants who cannot
be absorbed in the manufacturing areas end up in the urban informal sector.
Other features in developing countries are that exports are in many cases low,
and most of the existing exports are of primary products. Moreover some
developing nations have for a long time depended on foreign aid.. There have
also been cases of some nations getting caught in international debt trap.
Some other characteristics are that developing nations have non-diversified
financial sectors with still a large presence of informal money and capital
markets. There is financial repression and finance and credit do not flow to
requisite areas and to those who require. There are financial constraints on
growth.
Developing nations also often show low levels of attainment as far as social
sector is concerned. Education, even literacy and primary level enrollment, as
well as health levels are low, in some case basic and minimum needs are not met.
Clean drinking water and sanitation is not universal, infrastructure like good
roads electricity, good systems of telecommunication too are not widespread.
Often developing nations have governments providing poor governance, other
institutions are not well developed, and levels of social capital is low too. You
will read about all these in greater detail in later units of this course and in the
course Development Economic –II (BECC 114).

1.5 DEVELOPMENT AND WELLBEING

We have defined economic development as the sum total of economic growth (a
quantitative aspect) and economic welfare (a qualitative aspect). We have
presented above a few important indicators of economic growth. Now, let us shift
our attention to the indicators of economic welfare.
GNP as an Indicator of Economic Welfare
GNP estimates are more commonly employed as an indicator of economic
welfare. An increased output of goods and services, it is believed, implies an
increased availability of goods and services for consumption. Thus, enabling a
wider choice and a better standard of living; these are the hallmarks of economic
development.
However, this simple positive relationship between increase in GDP and increase
in economic welfare is subject to certain qualifications. Among these, the
following are noteworthy:

17
Growth and 1) Changes in the Size of GDP and Economic Welfare
Development
i) If the GDP increases but the population of the country increases in a
greater proportion, the total economic welfare will decline. As a result
of increased population, the per capita income will decline, which
means lesser purchasing power than before, lower standard of living,
and consequently, lower economic welfare.
ii) While analysing the relationship between the size of GDP and economic
welfare, the behaviour of the price movements must be thoroughly
studied. GDP calculated at current prices is always deceptive and
increase in its size will not promote economic welfare. Estimates of real
GDP (i.e., GDP calculated at fixed base prices) can provide a better
measure.
iii) GDP consists of those goods and services which are transacted in the
market and fetch money value. We know that a part of the total produce
is kept by the producers for self-consumption. Now, suppose that this
retained produce (which is not part of GDP) is offered for sale in the
market, it will definitely fetch money value and as a result GDP will
also increase. In fact, the total output is same, but since it has now come
to the monetary sector, it becomes a part of the GDP and hence
increases its value. Such an increase in GDP will not increase the
economic welfare.
iv) In case increase in the size of GDP is the result of prolonged working
hours, increased employment of children in production, unhealthy and
polluted atmosphere inside the factory premises, such an increase in
GDP will not promote economic welfare.
2) Changes in the Composition of GDP and Economic Welfare
Composition of GDP refers to the kinds of goods and services produced in
an economy. Changes in the composition of GDP may sometimes increase
economic welfare and may at other times decrease it. Let us consider the
following cases:
i) If the total production has increased on account of more production of
capital goods, it will not increase economic welfare. No doubt the
money value of the total output has increased, but the volume of
consumer goods, on which depends the real economic welfare, has not
increased. It is only when the proportion of consumer goods increases in
the total output the GDP can promote economic welfare.
ii) If the GDP has increased on account of larger production of war-goods,
the resultant increase will not increase economic welfare. This may no
doubt head to increased fighting capacity of the country but it will do no
good to economic welfare.

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3) Changes in the Distribution of GDP and Economic Welfare Concept Indicators and
Measurement
If the GDP increases and yet if it is not fairly distributed or it is concentrated
in a fewer hands, it will not promote economic welfare. It is so because as
the rich people get richer the additional money income does not provide
them the same marginal utility as the preceding unit of money income. In
other words, the law of diminishing marginal utility also applies to the
additional money income so that the economic welfare instead of increasing
will diminish.
When the distribution of GDP changes in favour of the poor, they start
getting more commodities and services than before, as a result the economic
welfare increases. Any transfer of income from the rich to the poor,
generally, promotes economic welfare. In fact, there is a unique relationship
between one’s economic welfare and that part of his income which he spends
on consumption and consequently smaller is his economic welfare compared
to this total income. The poor people who spend a major proportion of their
total income on consumption, as a matter of fact, will get more utility from
the transferred income as compared to the rich people.
Transfer of income from the rich to the poor, however, does not increase
economic welfare always, especially if additional income in the hands of the
poor gets frittered away on such things as simply reduce his welfare.
Per Capita Income as an Index of Economic Welfare
Ordinarily speaking, per capita income is considered as an indicator of the
standard of living in a country; any improvement in it is taken as a proxy for
improvement in the standard of living. That may be so, but there are certain
limitations beyond which we cannot rely on this single average.
One, per capita income is a simple average which s derived by dividing the
income of all the nationals of a country. It shows only the size of slice from the
national cake that should by going to each individual. It cannot tell us anything
about the actual distribution. In other words, per capital income estimates are
silent about the distribution of income. To that extent, per capital income
estimates may not be very useful, especially if there is a highly skewed income
distribution in an economy favouring the rich.
Two, per capita income estimates are also silent about the composition of output
– the nature of goods and services produced in the economy.
Three, standard of living is also affected by the type of expenditure incurred by
the government authorities. If the government meets the collective wants of
education, public health, public transportation, safe drinking water, etc., the
people may enjoy a higher standard of living, even with modest per capita
income.
Four, for the purpose of international comparison, per capita income estimates
are framed in a common monetary denominator, usually the American Dollar.

19
Growth and This common denominator cannot take account of purchasing power differences
Development
in different countries.
In some units in other chapters you will be acquainted with some other indicators
of welfare. In this unit we present a discussion on the Millenium Development
Goals and Sustainable Development Goals , in the following section.

1.6 THE MILLENNIUM DEVELOPMENT GOALS

AND THE SUSTAINABLE DEVELOPMENT
GOALS
1.6.1 The Millennium Development Goals
It is difficult to measure development as it is such a wide-ranging and multi-
faceted concept. There has been a lock of a commonly agreed-upon definition.
However, there have been several attempts to measure development and develop
policy measures to foster development based on the ideas about the concept of
development put forward. One such measure was the adoption of the Millenium
Development Goals. Even without a commonly agreed- on definition, policy
makers need specific targets, so as to realize policy objectives . One such set
of targets is known as the millennium development goals (MDGs). The
Millennium Declaration and Millennium Development Goals (MDGs) saw the
convergence of development agenda of United Nations Development Programme
(UNDP); United Nations Environment Programme (UNEP); World health
organization (WHO); United Nations Children's Fund (UNICEF); United Nations
Educational, Scientific and Cultural Organization (UNESCO); and other
development agencies.
In September 2000, 189 nations adopted the “United Nations Millennium
Decla- ration,” a broad-reaching document that states a commitment “to
making the right to development a reality for everyone and to freeing the
entire human race from want.” The declaration specifies a set of eight goals
consistent with this commitment:
Goal 1:Eradicate extreme poverty and hunger.
Goal 2: Achieve universal primary education.
Goal 3: Promote gender equality and empower women.
Goal 4.:Reduce child mortality.
Goal 5. Improve maternal health.
Goal 6: Combat HIV/AIDS, malaria, and other diseases.
Goal : Ensure environmental sustainability.
Goal 8. Develop a global partnership for development.
To realise these goals, there were 21 targets (that correspond to 60 indicators)
that were sought to be reached by 2015.

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1.6.2 The Sustainable Development Goals Concept Indicators and
Measurement
The world as a whole, and India too, made considerable progress in meeting te
targets. And yet some gaps remained.
The 2030 Agenda for Sustainable Development, adopted by all United Nations
Member States in 2015, provides a shared roadmap for peace and prosperity for
people and the planet, now and into the future. At its core are the 17 Sustainable
Development Goals (SDGs), which are an urgent call for action by all countries -
developed and developing - in a global partnership. The SDGs include 17 goals
and 169 targets. The 17 goals are to be achieved by 2030. The 17 goals are:
1. End poverty in all its forms;
2. End hunger , improve nutrition and achieve food security;
3. Ensure healthy lives and well-being;
4. Ensure equitable and quality education for all and promote lifelong learning;
5. Achieve gender equality and empower women and girls;
6. Ensure availability and sustainable management of clean water and
sanitation for all ;
7. Ensure access to affordable, reliable, sustainable and clean energy for all;
8. Promote sustained , inclusive and sustainable economic growth, full and
productive employment and decent work for all;
9. Build resilient infrastructure, promote sustainable Industry, and promote
innovation,;
10. Reduce inequality within and among countries;
11. Make cities and human settlements inclusive, safe, resilient and sustainable;
12. Ensure responsible consumption and production patterns;
13. Take urgent action to combat climate change and its impacts;
14. Conserve and sustainably use seas, oceans and marine resources;
15. Promote , protect and restore sustainable use of terrestrial ecosystems,
sustainably manage forests, combat desertification, halt and reverse land
degradation and halt biodiversity loss.
16. Promote peaceful and inclusive societies for sustainable development,
provide access to justice for all, and build effective, accountable, and
inclusive institutions at all levels; and
17. Strengthen the means of implementation and revitalise global partnership for
sustainable development.
In 2000, the MDGs set the agenda for development activities and consisted of
eight targets aimed at combatting poverty. While the MDGs set the target and
there we quite a few achievements, they were faced with many criticisms. These

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Growth and criticisms mainly included around their legitimacy and how the goals and targets
Development were chosen and set, their narrowness and under emphasis of certain aspects of
development, including human rights, gender and the environment, and how the
progress was reported and measured.
When the MDGs period was reaching an end, it was agreed by all countries to
reform and propose a more widespread, inclusive and reflective set of
development goals. The SDGs emerged as an attempt to represent the challenges
that countries face in the next 15 years and beyond, and is an attempt to address
the root cause of many of them.
The 17 SDGs were identified through widespread consultation over three years
on contrast to the MDGs. This process took into account the views of all parties,
including national governments, civil society, multilateral development
institutions and individuals.
How are the SDGs different from MDGs?
While the MDGs mainly applied to developing countries, the SDGs are
universally applicable. That is they apply to all countries, no matter their current
development status.
Meeting SDGs require that they are implemented in an integrated manner and is
based on the recognition that there is no trade-off between economic, social and
environmental development. Indeed each of these aspects is mutually reinforcing
and one cannot be achieved without the other, or failure in one area could lead to
failure in others. This is in contrast to the MDGs which primarily focussed on the
social aspects of development.
By their nature, the SDGs are a set of broad goals and targets, this is so each
country can decide on the most realistic and practical way to implement policies,
programmes or projects to move towards meeting the SDGs. They build off the
MDGs, but offer more ambitious goals.
Check Your Progress 2
1. Evaluate the usefulness of (i) GDP, and (ii) per capita GDP as measures
of economic development and of welfare.
……………………………………………………………………..….……
………………………………………………………………………..….…
………………………………………………………………………..….…
………………………………………………………………………..….…
2. Discuss some characteristics of developing nations.
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 3. What are the Millennium Development goals? How many goals are there Concept Indicators and
Measurement
in the Sustainable Development goals? List any seven
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1.7 LET US SUM UP

This unit dealt with the basic of economics of development as well as the
concepts of economic growth and development. It began with explaining what
growth means: enlargement, expansion. Economic growth is typically seen as
growth in gross domestic product. The unit explained the measurement of growth
and also discussed the relative merits of considering growth in GDP as growth
versus growth per-capita GDP. The unit explained how growth is measured, and
how to compare income levels across countries and over time .
The unit went on to discuss in detail the concept of economic development, and
how it differs from economic growth. The unit explained that economic
development is a much broader concept than economic growth, although
economic growth is the foundation of economic development. However, though
economic growth is a fundamental concept of economic development, the latter
is characterized also by an overall structural transformation of economy.
Examples of such structural change includes decline of the share of agriculture in
GDP and the rise of that of the service sector; increasing urbanization, change in
the composition of the work-force, and so on.
Subsequently, the unit discussed in detail the characteristics and features of a
developing economy. We saw low per-capita income, a large agriculture, low
urbanization were some of the characteristics.
After this the unit discussed elaborately the concept and meaning of economic
development in all its aspects and dimensions. Finally the unit presented a
discussion the Millennium Development Goals and Sustainable Development
Goals.

1.8 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1. See section 1.2
2. See section 1.2
3. See section 1.3
Check Your Progress 2
1. See section 1.5
2. See section 1.4
3. See subsection 1.6.2
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