Download How is development measured?

How is development measured?
• Development is a complex process and there is
little agreement on how to measure it
• The most common and easiest measures
are Economic measures: Gross Domestic Product
and Gross National Product (economic indicators)
GDP & GNP
GDP
Economic indicators
• GDP is definitely the preferred measure of
development among economists and is gaining
popularity in general conversation as well.
• GDP stands for Gross Domestic Product
Definition of GDP
Economic indicators
• GDP measures the value of all
production within a nation, by
whoever happens to be working
there
• This is usually presented as a per capita value
(GDP divided by the population)
Choropleth map showing world
distribution of GDP per capita…
How do some countries fair on a GDP per
capita (PPP) list?
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Qatar:
Luxembourg:
USA :
U.K.:
Japan:
France:
South Korea
Botswana:
China:
Philippines:
India:
Kenya:
Bangladesh:
Burkina Faso:
Zimbabwe:
$87 600
$79 400
$45 800
$35 500
$33 500
$32 600
$25 000
$14 300
$ 5 400
$ 3 200
$ 2 600
$ 1 700
$ 1 400
$ 1 200
$ 200
2005 data
Evaluation of GDP per capita
What are the strengths and limitations of this
indicator?
Strengths
Limitations
•Broadest indicator of economic growth
•Does take inflation into account (can
compare data against other time periods)
•Doesn’t take disparity into account
•Only account for monetary value (not
quality of product)
•Counts work done from repairing harm
•Ignores externalities (eg. Damage on
environment)
•Does not measure sustainability of
economic growth
GNP & PPP
JP Campos, Bengi Tetik, Emily Lee,
Hiram Adames
GNP?
Gross National Produce/Product
• Measures production of all nations citizens
•
No matter where they are working
• Higher GNP, Higher quality of living
• Per Capita of a country shows average value
goods &
services produced by each person each year. Divided by the total
population to get an average earnings per person.
http://www.studentsoftheworld.info/infopays/rank/PNB2.html
Difference Between GNP & GDP
• The Difference between GNP and GDP (Gross
Domestic Product) (Gross Nation Product)
• GDP Focus on the domestic economic strength
of a country
• GNP focuses on how the nationals of a
particular country are faring financially.
Choropleth map showing world
distribution for GNP Per Capita
Explanation of Map
• The Map is showing the world distribution of GNP per capita
• as you can see, the map has a legend that shows the amount
of money each country earns
• The Countries that have the Darkest colors represent the
highest GNP and the lightest color represent the countries
with the lowest GNP
• examples of High GNP on the map are: America, Australia,
Japan and Western Europe Which have 15% of worlds
population ( keep in mind that these are all countries that are
also MEDC)
• examples of low GNP on the map are : Rwanda, Burundi,
Ethiopia, Tanzania, Uganda, Mozambique, Sierra Leone and
Vietnam. They all have 56% of the worlds population and they
are all LEDC countries
Evaluation of GNP per capita
Strength's
Limitations
Gives an estimation of what a
country makes per person
Can't be used to compare individuals accurately
Can be used to compare how much
other countries make
Can't be used to compare a countries previous
GDP unless a calculation is done
Can be used to get an idea of
standard of living
Does not distinguish between the poor and rich
Out of all the ways that economists
tell a countries economic health,
this is the best
Does not take into account the underground
economy
Non-market transactions
Can't accurately be used for knowing the
standard of living
Doesn't account quality of goods
Disasters raise GNP
Doesn't account for unpaid labor
Doesn’t account for the income of embassies
Economic indicators
What is the PPP adjustment?
• GNP & GDP are often been criticized as being unfair measures
of development, and one of the reasons why is because they
don’t take into account the cost of living of the country
• These measures are made more fair by using the PPP
(Purchasing Power Parity) adjustment. This is a adjustment that
is made to countries GNP/GDP scores to take into account the
cost of living in a country making it a more fair measure of
development – this is why you often see it presented as GDP
(PPP) per capita for example.
Questions
1)
2)
3)
4)
5)
What does GNP mean?
Difference between GNP and GDP?
What does the map show us?
What are some strengths and limitations?
Why is PPP used?
Bibliography
• "Difference Between GNP and GDP." Differencebetween,net. Web. 6
Apr. 2011. <http://www.differencebetween.net/business/differencebetween-gnp-and-gdp/#ixzz1Ih6dZ3Bn>.
• Limitations of GDP Statistics. Web. 5 Apr. 2011.
<http://ingrimayne.com/econ/Measuring/GNP2.html>.
• What Are the Advantages and Disadvantages of Gross Domestic
Product. Wiley Publishing, 2000. Web. 5 Apr. 2011.
<http://www.cliffsnotes.com/Section/What-are-the-advantagesand-disadvantages-of-Gross-Domestic-Product-.id-305399,articleId97163.html>.
• "What Is GNP? Definition and Meaning." InvestorWords.com Investing Glossary. Web. 05 Apr. 2011.
<http://www.investorwords.com/2186/GNP.html>.
More Social Indicators
Definitions:
• Death/birth rate: the number of
deaths/births 1000 of the population
per year
• Infant Mortality: number of infant
deaths (one year of age or younger)
per 1000 live births
• Literacy rate:% of the population over
age fifteen that can read and write
Choropleth map showing birth rate per 1000 people….
Death/birth rate: the number of deaths/births
1000 of the population per year
Choropleth map showing infant mortality (per 1000 live berths)
Infant Mortality: number of infant deaths (one
year of age or younger) per 1000 live births
Choropleth map showing literacy rates(% of population over 15 years of age)
Literacy rate:% of the population over age
fifteen that can read and write
Evaluation of social indicators (birth
rate, infant mortality & literacy)…..
What are the strengths and limitations of these
indicators?
Strengths
Limitations
•Level of education
•Level of economic development
•Healthcare
•Family planning
•Population growth
•Quality of life
•Impact/Type of religion practiced
•Other aspects of schooling
•Quality of the environment surrounding infa
•Other aspects of healthcare system
Questions
1) What is the difference between social and
economic development?
2) How are the three indicators linked?
3) Name one strength and one limitation?
4) Do all of these three factors follow the
Brandt Line?
5) Which social factor is indicative of
healthcare?
Social indicators
GABY, JULES AND WILLIAM
DEFINITIONS
• PEOPLE PER DOCTOR:
• The total population divided by the number of
doctors in a country.
• LIFE EXPECTANCY:
• The average number of years a person is
expected to live in the country.
A map showing the life expectancy
Number of inhabitants per doctor
Evaluation of social indicators
STRENGTHS
- People per doctor shows a
strength of percentage on how
much health care is needed.
- The more doctors in one country
can help cure many diseases.
LIMITATONS
- The data doesn't’t show what
kind of doctor and how many
people one doctor can help.
- Depending on the country the
doctor could have a lack of
education and resources
- Life expectancy correlates to the
compared to others due to its
level of healthcare and sanitation
developing state.
- Life expectancy relates to the
Brandt line, if you look at both
- Life expectancy doesn't’t talk
maps its almost the same.
about the quality of life
(accurate in showing the
(diseases
development)
- Life expectancy only focuses on
one aspect of development.
Questions
1) Name two strengths and two limitation of using social
indicators to measure development
2) Name two factors about both maps
3) What is the definition of life expectancy
4) What is definition of people per doctor
5) How do you think these life expectancy and doctors
can affect a country
What alternative measures are there?
• The United Nations Development Programme
introduced a more meaningful measure of
development:
The Human Development Index, or
A composite indicator:
Combines Social & Economic
indicators
HDI
composite indicators
How does the HDI measure development?
The HDI is an index calculated from three
variables:
• Income,
– measured by GDP per capita
• Knowledge,
measured by adult literacy rates and the
percentage of children attending school
• Longevity,
– measured as life expectancyat birth
composite indicators
Calculating HDI values….
• For each of the three values (education, life
expectancy and GDP), the world’s highest and
lowest values are found.
• The highest possible measure is given the value 1,
and the lowest 0.
• E.g. Japan’s life expectancy is the highest at 80 years,
Angola's is the lowest at 37. A country with a value
mid way between the two would get a score of .5
• The three variables are averaged to give a country’s
HDI
Activity: Define HDI and explain how it is calculated
Calculating HDI….
Country A:
Knowledge 0.9
Income 0.4
Longevity 0.9
HDI =
Country C:
Knowledge 0.8
Income 0.7
Longevity 0.9
HDI =
Country B:
Knowledge 0.4
Income 0.8
Longevity 0.5
HDI =
Country D:
Knowledge 0.7
Income 0.6
Longevity 0.5
HDI =
Analysis: What type of countries are these? Which are the most or least developed? Any
resource rich countries?
Choropleth map showing global HDI distribution
Variations in the HDI
• “The best”: Countries with the highest HDIs include Canada (0.888),
Switzerland, Japan and Sweden.
• Europe and Latin America both have a lot of countries in the very high HDI
section
• The best HDI rated counties ranges from 0.8’s – 0.7’s
• “The worst”: Countries with the lowest include Guinea, Burkina Faso
(.305) and Afghanistan
• “The under performers”: Countries scoring high on GDP but relatively low
in the HDI include Saudi Arabia, Namibia and the
United Arab Emirates (life expectancy is 76.51 years, Very high GDP, 77.9% of
population age 15 and over can read and write.) (rank 32 of the
• suggesting need to transfer oil and mineral revenues into improved living
standards.
• HDI can made to show regional variations
Evaluation of HDI…..
What are the strengths and limitations of this
indicator?
Strengths
Limitations
focusing exclusively on national performance
and ranking
As a result of that, rich countries effectively
cannot improve their ranking in certain
categories, even though there is a lot of scope
for economic growth and longevity left.
failure to include any ecological considerations
Economist Bryan Caplan has criticized the way
HDI scores are produced; each of the three
components are bounded between zero and
one