Ethiopian Civil Service

University

Chuol R. Kompuok (PhD)

Africa Institute of Governance and Development
1.2 Measuring Growth & Development
 World Patterns in economic
development.
• Economic activities not evenly spread across
the world.
• Every country experiences different physical
and social conditions.
• World can be divided into 3 regions based on
levels of economic development:
1 - Developed
2 - Least Developed
3 - Quickly Developing
 1 - Regions with developed countries
• Europe, North America, Japan, Australia.
High levels of industrial activity.
Well developed health-care systems
Educated population.
Social and economic equality between sexes.
Low child mortality.
Most employment in services and manufacturing.
Gross National Product (GNP) is high and
increasing.
 2 - Regions with least developed
countries (LDCs)
 Many African countries (e.g. Zambia, Ethiopia, Sierra
Leone).
 Some Asian countries (e.g. Bangladesh, Afghanistan).
 Poorest in the world.
 Low GNP (less than $750) and may be decreasing.
 Low life expectancy
 Millions living in absolute poverty.
 Disease is common
 Government may be corrupt.
 Females are often uneducated.(working on land).
 Limited manufacturing and services.
Heavily indebted poor countries (HIPCs)

• Many LDCs are HIPCs.

• Highest levels of poverty in the world.
• Eligible for international debt relief measures
which aim to reduce their external debt to
more manageable levels.
• The HIPC programme identifies 38 countries as
being potentially eligible to receive debt relief,
most of which are in sub-Saharan Africa.
 3 – Quickly Developing Countries.
• Southeast Asia (e.g. Malaysia, Indonesia, China and
India)
• Most of South and Central America (e.g. Brazil and
Mexico).
• North African countries such as Egypt.
• Industrialised rapidly in last 15 years.
• More jobs became available in manufacturing and
services.
• However, at risk of exploitation by multinational
companies (MNCs) looking for cheap labour.
• Healthcare and literacy improving.
• GNP is increasing.
• Distinct North-South divide in wealth.
• 20% of world’s population has 80% of the
world’s wealth.
• The North also controls 80% of world’s trade
and investment, 90% of its industry and almost
100% of its research.
• Australia and New Zealand are included in the
North even though they are located in the
Southern hemisphere.
 Measuring Economic Development.
• Difficult to give a definite measure for the
economic development of a country.
• Many things can be measured – life expectancy,
number of doctors, internet access, car
ownership, employment etc.
• However there are 2 scales which are most often
used to measure economic development of a
country:
 Gross National Product (GNP)
 Its position on the Human Development Index (HDI).
 Gross National Product.
• The most commonly used measure of a country’s
wealth.
• It is the value of goods and services produced in a
country and by companies from that country which are
located abroad.
• Sometimes Gross National Income (GNI) is used instead
of GNP but we take them to mean the same thing.
• Gross Domestic Product (GDP) is the value of goods and
services produced by a country’s businesses and
organisations plus the value of goods and services
produced by foreign-owned business corporations in
that country.
Problems using GNP as an indicator of
development.
1 – misleading as its an average figure.
2 – affected by the proportion of multinational
companies in the country who take their profits
elsewhere.
3 – some countries have low GNP but score well in
other measures of development, reflecting an
investment in social services.
4 – GNP figures do not reflect living costs in different
countries. US$1 in Bangladesh buys much more than
it would in the U.S.A.
 Human Development Index.
• A scoring system to rank countries based on their
social and economic conditions.
• Always expressed as a number between 0 and 1.
• Countries given points based on their progress in
three areas of human development:
1 – A long and healthy life.
2 – Education.
3 – A decent standard of living.
• As the HDI includes social and economic
indicators of development, it provides a broader
view of development than GNP.
• The HDI is based on people’s needs.
Problems using HDI as an indicator.
1. Can conceal inequalities within countries. A high
score may not apply to entire population.
2. Not always a direct link with a high score on HDI
and high GNP – Middle East countries , Czech
Republic.
3. Not suitable for tracking short term changes in
development. 2 factors – adult literacy and life
expectancy are not very responsive to short-term
policy changes made by governments.
4. The HDI is not a comprehensive measure.
Some factors which influence the HDI.
• Health factors affecting life expectancy are:
• Politics – how much government spend on primary
health care.
• Water availability and access to pure water – 30%
of the worlds’ population are at risk from typhoid,
cholera etc
• Malnutrition
• HIV/AIDS – in the southern countries of Africa, 10%
of the population are ‘living’ with this disease.
 Effects of Aids on Life Expectancy
• South Africa:
• 1985 – 62
• 2007 - 45
 National Debt affects health and
literacy programmes:
• In 2003 African nations were repaying over 50
billion dollars of debts.
• The International Monetary Fund (I.M.F.) provides
loans to improve economic performances but under
strict conditions (called structural adjustments
programmes (SAPs)).
• This leads governments to cutback on health,
education etc and affects the HDI and can lead to
great hardship e.g. Riots in Argentina in 2005.
 Economic growth causes:
• Average income per person to rise.
• Improved HDI as people can afford better
medicine, food etc.
• Example:
• Ireland 1998 – 58% of E.U. Average.
• Ireland 2005 – 104% of E.U. Average.
 Zimbabwe – An example of Economic
Decline in an LDC.
• Zimbabwe’s economy is in ruins and it shows
that without proper management, a country’s
economy can decline and bring massive
problems.
 Countdown to Economic Ruin
• Population – 12 million
• Average life expectancy: 1990 – 62, 2004 – 37.
• Under- five mortality: 1990 – 80 per 1000, 2005 – 132 per
1000.
• Aids – 2001 – 160,000 deaths, 2005 – 180,000.
• GDP – 2000 US$7.4 billion, 2005 US$3.4 billion
• Inflation – 2000 – 56%, 2006 - 1050%.
• Unemployment – 2000 – 20%, 2006 – 75%.
• People living below the poverty line – 80%.
• Results of this decline – diseases, starvation,
unemployment, emigration.
 Levels of Economic Development.
• Levels of economic development can vary greatly
from country to country, region to region, i.e.
Economic development is unevenly distributed.
• There is an uneven rate of economic development
in the world and this has led to a development gap:
• Intercontinental regions: ‘north’ and ‘south’.
• International e.g. Countries in the same region e.g.
South Korea and North Korea.
• Within countries e.g. N. Italy and S. Italy.
Economic development should result in :
• Prosperity and a decline in poverty
• More and better paid employment
• A reduction in differences in the quality of life
between different regions.
 Child Wellbeing Table (2007)
• A UN study shows that strong economic growth
does not always result in a better quality of life for
children.
• Using criteria of : education, health care, family
relationships, poverty / deprivation
• The UN surveyed 21 developed countries: - 1st –
Holland, 2nd Sweden, 3rd Denmark, 12th Ireland, 21st
Britain.
• In countries that are poorer than Ireland and Britain
children were better off – e.g. Czech Republic