Download Measuring Development

Measures of Development
Economic and Social Development Indicators
Measuring Development
Studying development is about measuring
how developed one country is
compared to other countries, or to the
same country in the past so as to view its
progress.
 Development
measures
how
economically, socially, culturally or
technologically advanced a country is.

Measuring Development
When measuring / studying a country’s
development it becomes clear that some
countries are at different levels of
development compared to others.
 Put another way, some countries are said
to be more developed than other
countries (which are considered less
developed)

Types of development

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Economic – Living standard of the masses
which includes GDP.
Social- Life of the people and the
infrastructures in the country.
Political- The level and type of governance
being practiced in the country.
Environmental- This has to do with the natural
appearance of the environment.
Measuring Development

Two major aspects of development are
ususally measured:
◦ Economic Development and
◦ Human or Social Development
ECONOMIC DEVELOPMENT


This is a measure of a
country’s wealth and how it
is generated.
For example, agriculture is
considered
less
economically advanced than
banking.
HUMAN / SOCIAL DEVELOPMENT

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This is a measure of the
access the population has
to wealth, jobs, education,
nutrition, health, leisure and
safety - as well as political
and cultural freedom.
Material elements, such as
wealth and nutrition, are
described as the standard
of living.
Health and leisure are often
referred to as quality of life.
Economic vs Social Development
Measuring Development - Indicators
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There are a number of different ways in
which the various aspects of development
can be measured.
These are known as development indicators.
◦ A development indicator is usually a
numerical measure of the various aspects
of development in a country.
◦ Since there is a huge variety of economies,
cultures and peoples, a series of indicators are
used to illustrate progress of a country in
meeting a range of economic, social, and
environmental goals.
MEASURES OF DEVELOPMENT
TYPES OF
DEVELOPMENT
INDICATORS - 1
Types of Development Indicators 1

Geographers use economic indicators
when they wish to assess the economic
development of a country.These include:
◦
◦
◦
◦
◦
◦
GDP
GNP
GNI
GDP per capita
GNP per capita
GNI per capita
Economic Indicators



Gross Domestic Product (GDP): the
total value of goods and services produced
by in a country in a year by all the people
living in that country.
Gross National Product (GNP): the
total economic output of a country including
earnings from abroad (foreign investments).
Gross National Income (GNI): the total
income of a country including income and
taxes earned both internationally and
domestically.
one measure of the wealth of a
country is …
…the GDP which is usually given in US
dollars ($).
 GDP stands for:

◦ Gross (all the money earned)
◦ Domestic (in just one country)
◦ Product (added together)

Another measure is the GNP:
However,

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These indicators are not of much use
because they do not take into account that
countries vary greatly in size.
Larger countries will have larger incomes
than smaller countries who may actually be
just as wealthy.
To eliminate this problem caused by
differences in population size, we can divide
the GDP / GNP / GNI values by the number
of people in the country to get per capita
values.
per capita means per head of
population
GDP per capita: the total value of all the goods
and services produced in a country in one year
by all the people living in that country, divided by
the population. It is a measure of wealth.
 GNP per capita: a country's GNP divided by its
population.
 GNI per capita: the GNI for a country divided
by the population of the country to produce the
Average Gross Income per person.

◦ This is the most widely used indicator of economic
development.
Purchasing Power Parity (PPP)
Apart from area and population size,
countries may also vary according to their
cost of living.
 These 3 indicators, even though they may
adjusted for size, need to be adjusted for
variations in the cost of living and differences
in exchange rates of local currencies and the
US dollar.
 When these adjustments have been made,
the figures are said to have been adjusted for
Purchasing Power Parity (PPP).

Variations in area, GDP and per capita GDP
Country
Area (km²)
GDP ($US)
per capita GDP
($US)
China
9.6 million
7.9 trillion
6000
USA
9.8 million
14.4 trillion
47,500
Haiti
0.28 million
0.01 trillion
1300
UK
0.24 million
2.2 trillion
36,700
Variations in the cost of living.
The cost of living tends to
increase as countries become
more developed. Thus, a
dollar may buy more goods in
South Africa than it can in
Switzerland.
GDP per Capita (PPP) - by country
2016
GNI per capita by country
Other aspects of economic
development
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Economic growth measures the annual
increase in GDP, GNP, GNI, GDP per capita,
GNP per capita or GNI per capita.
Inequality of wealth is the gap in income
between a country's richest and poorest
people. It can be measured in many ways,
(e.g. the proportion of a country's wealth
owned by the richest 10% of the population,
compared with the proportion owned by
the remaining 90%).
◦ This can be shown using the Gini Coefficient and
Lorenz Curve.
Economic Growth vs. Economic Development
Sometimes these concepts are thought of as the same, but they are
not.
Economic Growth: This refers to the increase in the total output
of goods and services by a nation over time (GDP or GNP). It is
also sometimes defined as an increase in household income over
time (Average Gross Income). It is purely a monetary measure of
the increases in the material well being of a nation.
Economic Development: This refers to the improvement in
peoples’ standard of living over time. It is measured by
improvements in health, education, equality, life expectancy and so
on. It incorporates income as well, but is a much broader measure
than growth. Sometimes development can be shown by a movement
towards the production of goods that improve peoples lives.
Other aspects of economic
development
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Inflation measures how much the prices of
goods, services and wages increase each year.
High inflation (above a few percent) can be a
bad thing, and suggests a government lacks
control over the economy.
Unemployment is the number of people
who cannot find work.
Economic structure shows the division of
a
country's
economy
between
primary, secondary and tertiary industries.
Inflation
The unemployment rate is the proportion of the labor force that is
unemployed.
To calculate the rate, you need to know the number of people unemployed and
the number of people in the labor force.
Unemployment rate = number of unemployed people x 100
labour force
8,800,000 unemployed x100
147,000,000 civilian labor force
= 6.0% unemployment rate.
primary, secondary and tertiary
The primary sector involves extracting
raw materials, rearing animals and growing
crops.
 The secondary sector involves improving
and adding value to raw materials and
turning them into something that can be
used for effectively e.g. Manufacturing,
construction and textiles.
 The tertiary sector involves services and
includes retail, tourism, education, health and
banking.

The pie graphs show the
variations in the economic
structure of three countries
at different levels of
development
The line graphs show
how a country’s
economic structure (in
this case the UK) may
change as the country
develops over time.
Other aspects of economic
development
Demographics study population growth and
structure. It compares birth rates to death rates, life
expectancy
and
urban
and
rural
ratios.
Many countries with low levels of economic
development have a younger, faster-growing
population than countries with higher levels of
economic development.
 They also have more people living in the countryside
than in towns.

◦ For example, in 2014 the UK had a crude birth rate (CBR)
of 12 per 1,000 and a GDP per capita of US$46,313.33.
◦ Comparatively, Kenya had a CBR of 35 per 1,000 and a
GDP per capita of US$1,416.00
◦ In 2015, 17% of the population in the UK lived in rural
areas versus 74% in Kenya.
Problems with using GDP per capita as
an indicator of standard of living
Human Happiness
Beyond Markets
Externalities
Quality of Life
Non Market Activities
Environmental Factors
Black Market
Sustainability
Make up of GDP
Informal Economy
The Long Run View
Balance of spending
Problems with economic indicators - 1
It hides inequalities within a country. E.g. Saudi Arabia may have a high
GDP per capita but there is a vast gap between the rich and the poor
within the country.
Problems with economic indicators - 2
Money from power for heating is included in GNP.
So cold countries may appear wealthier.
Problems with economic indicators - 3
Subsistence farming generates no cash and so is
not included
Problems with economic indicators - 4
The informal economy does not declare cash so it
is not counted.
Problems with economic indicators - 5
The $ has different purchasing power in
different countries – cost of living is different.

“ Yes it is lovely and
it only cost me 50p
in our money.You
can get a decent
meal for a £1and the
beer and spirits are
dirt cheap as well. I
think I’ll haggle him
down a bit!”