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Measuring Development - Systems Notes
Introduction to development measures
Traditional economics uses GDP as the indicator of economic growth- and hence development.
This traditional perspective is too narrow because development is more than just growth and GDP is
purely an economic indicator
The UN has four human development indices:
(1) Human Development Index
(2) Gender-related Development Index,
(3) Gender Empowerment Measure
(4) Human Poverty Index
Human Development Index
The Human Development Index (HDI) is the average of three indicators
· Standard of living, as measured by real GNP per capita (PPP$)
· Life expectancy at birth, in years
· Educational attainment, as measured by a weighted average of adult literacy (two-thirds weight) and
enrolment ratio (one-third weight)
The closer the HDI is to 1, the closer the country is to achieving the maximum values defined for each of
the three indicators.
According to the UN, in 2002, the countries with the highest HDI were as follows:
1. Norway
2. Sweden
3. Canada
4. Belgium
5. Australia
6. United States
7. Iceland
8. Netherlands
9. Japan
10. Finland
By contrast, the countries with the worst HDI in 2002 were:
1. Sierra Leone
2. Niger
3. Burundi
4. Mozambique
5. Burkina Faso
6. Ethiopia
7. Guinea-Bissau
8. Chad
9. Central African Republic
10. Mali
Source: United Nations Development Report 2002
Human Poverty Index
The Human Poverty Index (HPI) measures the proportion of people not expected to meet specified
target levels for given economic and quality of life indicators:
· P1 Percentage of people not expected to survive to age 40
· P2 Percentage of adults who are illiterate
· P3 Percentage of people who fail to attain a 'decent living standard'
P3 is subdivided into three (equally weighted) separate items:
(a) Percentage of people without access to safe water
(b) Percentage of people without access to health services
(c) Percentage of people with underweight children.
Gender-related development index
The Gender-related development index (GDI) is simply the HDI adjusted downward for gender
inequality. Gender Empowerment Measure (GEM) measures how women take active part in economic
and political life. Differing from the GDI, it exposes inequality in opportunities in selected areas
Given its complex nature, there are many measurements of development. The following are some of the
more commonly used measurements.
(a) General Indicators:
GDP – Gross Domestic Product: The Total value of all goods and services produced in an economy in a
given period, usually one year.
GNP – Gross National Product: The total value of all goods and services produced in an economy in a
given year plus all incomes received from abroad minus all payments sent abroad.
PQLI – Physical Quality of Life Index: Measures left expectancy, infant mortality rates and literacy levels.
These are measured on a scale of to 0 to 100 – 0 being the worst performance in each category in 1950
and 100 being the best performance expected for the year 2000. The indices are then averaged.
HPI – Human Poverty Index: The human poverty index measures deprivation on basic human
development and is made up of four indicators. There are the percentage of people expected to die
before the age of 40, the percentage of adults who are illiterate, the percentage of people without
access to safe water and to health services and the percentage of underweight children under the age of
HDI – Human Development Index: This is one of the most comprehensive calculations of poverty. It used
by the UNDP in their annual human development reports. It uses three equally weighted dimensions of
human development – life expectancy at birth, adult literacy rate and purchasing power. Ireland
currently ranks at No 12 among the 175 countries documented by this year's Human Development
Index. Sierra Leone comes last, but note some countries are not listed, like Somalia, Liberia, and East
Timor who could fall even lower.
(b) Millennium Development Goals:
In 2000, the UN members adopted The Millennium Declaration, which ‘committed countries – rich and
poor – to doing all they can to eradicate poverty, promote human dignity equality and achieve peace,
democracy and environmental sustainability’. At the United Nations Millennium Summit world leaders
put development at the heart of the global agenda by adopting the Millennium Development Goals
(MDGs), which set clear targets for reducing poverty, hunger, disease, illiteracy, environmental
degradation and discrimination against women by 2015. On the ground in 166 countries, UNDP uses its
global network to help the UN system and its partners to raise awareness and track progress, while it
connects countries to the knowledge and resources needed to achieve these goals. Based on the many
factors causing poverty, the United Nations has set the world a challenge that by 2015 poverty will be
reduced and development advanced, by countries working together to achieve what has been called the
Millennium Development goals.
There are eight Goals in all, divided into 18 specific, measurable targets;
The eights targets are as follows:
1. To eradicate extreme poverty and Huger
2. Achieve universals primary education
3.Promote gender equality and empower women
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria and other diseases
7. Ensure environmental sustainability
8. Develop a global partnership for development
While there has been some progress to date, overall improvement has been slow - particularity in the
least developed countries. For example, if progress continues at the same pace as the 1990s, subSaharan Africa would not reach the goals for poverty reduction until 2147 and for child mortality until
2165. (UNDP 2003). Each of the development goals will be explored in more detail in the session notes
that follow. For more details and an overview of each goal, please visit:
key terms
Absolute advantage
Comparative advantage
Concessional loans
Debt management
Developed countries
Developing countries
Economic Development
Foreign debt
Free trade
Gini coefficient
Harrod-Domar model
Human capital
Human Development Index
Human Poverty Index
International Development Association
International Finance Corporation
Lewis model
Newly Industrialised Countries
Non-renewable resources
Rostow model
Social cohesion
Solow model
Tobin Tax
Trickle down theory
Unbalanced growth model
Washington Consensus