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Lecture Notes

Development indicators are criteria used to assess the level of development in a country, encompassing economic, social, and cultural factors. Key indicators include GDP, GNP, Human Development Index (HDI), and Human Poverty Index (HPI), which measure aspects like economic growth, income inequality, and quality of life. While GDP and GNP provide insights into economic output, HDI and HPI focus on human well-being and deprivation, highlighting the complexities of measuring development.

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21 views9 pages

Lecture Notes

Development indicators are criteria used to assess the level of development in a country, encompassing economic, social, and cultural factors. Key indicators include GDP, GNP, Human Development Index (HDI), and Human Poverty Index (HPI), which measure aspects like economic growth, income inequality, and quality of life. While GDP and GNP provide insights into economic output, HDI and HPI focus on human well-being and deprivation, highlighting the complexities of measuring development.

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What are development indicators and how do they

measure development?
• Development indicators are simply the criteria to determine development of a
country. In other words they are factors which when present or absent or are available
in large quantities or in limited quantities, one would conclude that there is development
or there is underdevelopment or non-development.

• These factors are used to measure development. That is they lead us to determine the
extent development has occurred.

• Indicators are designed to evaluate whether governments do the right things to help the
poor
Major development Indicators
Economic Indicators
As measures of development in:
• Economic growth

• Industrialisation - is the process by which an economy is transformed from primarily


agricultural to one based on the manufacturing of goods.

• GNP/GDP - Gross National Product or Gross Domestic Product – The total final
output of goods and services produced by the country’s economy within the country’s
territory by residents and non-residents. GDP measures the total value for final use of
output produced by an economy, by both residents and non-residents.
Economic Indicators cont…
• Income inequality between regions and social classes – is measured by Gini
Coefficient, which is a number between 0 and 1, where 0 (0%) representing perfect
equality (everyone has the same income) and 1 (100%) representing absolute inequality
(one person has all the income, and everyone else has zero income).

• PPP - Purchasing Power Parity - Calculation of GNI using a common set of


international prices for all goods and services, to provide more accurate comparisons of
living standards. PPP is defined as the number of units of a foreign country’s currency
required to purchase the identical quantity of goods and services in the local developing
country market as $1 would buy in the United States.
Major development Indicators
Social Indicators
• PQLI- Physical Quality of Life Index- This uses Adult Literacy rate, life expectancy at
age 1 and Infant mortality rate.
• HDI – Human Development Index – This uses life expectancy (longevity), adult literacy
rate (knowledge and mean years of schooling, standard of living (as measured by real
per capita income or PPP (purchasing power parity)
• Human Nutrition
• Size of population
• Rate of population growth
• Malnutrition (underweight) – lack of proper nutrition.
Major development Indicators
Cultural and political
• Status of women
• Governance/Government
• Political stability
• Ethnic/cultural variety
HUMAN POVERTY INDEX
OTHERS
• Infrastructure
• Technological dependence
• Energy consumption

• Human Poverty Index (HPI) – indication of the standard of living in a country and was
developed to complement the Human Development Index (HDI).
2.4.4 Measurements with HDI and PQLI and GDP
• The HDI and PQLI measure the average progress of a country in human development. It uses literacy
levels, Mortality rate, Life expectancy rates to measure development.

• The HPI (Human Poverty Index) focuses on the proportion of people below the threshold level in the
same dimensions of human development, - living a long and healthy life, having access to education,
and a decent standard of living (UNDP 2006). The HPI measures severe deprivation in health by the
proportion of people who are not expected to survive age 40.

• GDP (Gross Domestic Product) & GNP or GNI (Gross National product or Income) measure
incomes and production output of a country. GDP is the total value of goods and services produced in
a country over a particular year, while this total value in addition to external incomes form the GNP or
GNI.

• The latest and most ambitious attempt to have been undertaken by the United Nations Development
Program analyse the comparative status of socio-economic development in the LDCs (Least
Developed countries) and MDCs (More Developed Countries) have been undertaken by the United
Nations Development Programme (UNDP) in its yearly Human development reports (UNDP). (NB:
Students should make efforts to access these reports which are also available on the internet)
2.4.5 Rationale for the Economic and Social measurements.
• The GNP/GDP per capita is a useful broad expression of the material well-being of
nations. It is the simplest and easiest quantitative measurement of well-being or income.

• However it has many shortcomings to be considered as a useful measurement. This is


because among others it is often very difficult to obtain accurate and reliable population
data. It also fails to include non-marketed subsistence production.

• Efforts have been made to remedy these shortcomings by using alternative methods
which fall into two groups - those that seek to measure development in terms of a normal
or optimal pattern of interaction among social, economic, and political factors and those
that measure development in terms of quality of life (Todaro 2006) as mentioned in section
2.4.2 and 2.4.3.
REFERENCES (USED FOR THIS UNIT)
• Todaro, M.P. 2006 Economic Development. New York: Longman Ltd

• UNDP 2006. Human Development report. http://www.UNDP.org/hdr

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