Measuring Economic Growth
Measuring Economic Growth
• Single indicators
- GDP/GNI per person (per capita) at PPP
- Health and education indicators
- Economic/social inequality indicators
- Energy indicators
Lesson - Environmental indicators
Objective •Composite indicators
Section 4.8 - Human Development Index (HDI)
- Gender Inequality Index (GII)
- Inequality-adjusted Human Development Index (IHDI)
- Happy Planet Index
1. GDP per capita: a total of all economic activity in a country, divided by the number in the
population. (this includes the income of foreign companies producing in the country)
GNI per capita: total income that is earned by a country’s factors of production, divided by
number of population. (this means that the income of foreign companies producing within a
country would not be included in the national income)
Single Note:
Indicators In developing countries the FDI is calculated in the GDP, so figures will be higher than the
GNI. (as their profits will not remain in the country) Hence this is why GNI figures tend to be
used.
In developed countries whose firms are involved in FDI, their GDP will be lower than their
GNI.
2. Purchasing Power Parity (PPP): to avoid the exchange rate and cost of living in different
countries when comparing, they use PPP exchange rate. This exchange rate attempts to
equate the purchasing power of currencies in different countries. It is calculated by the
World Bank.
Health Measures:
1. Life expectancy at birth: a measure of the average number of years that a person may
expect to live from the time they are born. (one of the HDI measures)
Good health care, health services, providing of clean water and adequate sanitation,
provision of nationwide education, supply of food, healthy diet lifestyle, low levels of
poverty, and lack of conflict. The lack of these factors will lead to relatively low expectancy
figures.
2. Infant Mortality Rate: a measure of the number of deaths of babies under the age of one
year per thousand live births in a given year. (does not include babies that are still bon)
Single Education Measures:
Indicators 1. Expected years of schooling: measure the years of schooling that a child of school age
entrance age may expect to receive.
2. Mean years of schooling: a measure of the average years of schooling that have been
received by those people in the economy who are aged 25 years and over.
Other Indicators:
But still can would not show inequalities, in men and women and ethnic
group.
1. Gender Inequality Index (GII): this represents a major barrier to
human development. Women are discriminated against against
health, education, political representation, and the labor market.
It measures, reproductive health, maternal mortality ratio, and
adolescent birth, labor market participation, and rate of female to male
ratio of 15 years and older.
The higher the GII the greater the level of gender inequality.
Other
Indicators
2. Inequality-adjusted Human Development Index (IHDI) : it is the HDI
but takes into account the human development costs of inequality.
Other
Indicators
Countries with lower
inequality their IHDI
rank higher than HDI
Other
Indicators
5. Inclusive Development Index (IDI): measures how countries perform
on eleven dimensions of economic progress in addition to GDP. Mainly
focuses on growth and development, inclusion, and intergenerational
equity and sustainability.
P453
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