Economic development is the sustainable increase in living standards for a country, typically characterised by increases in life span, education levels, & income
There are many measures of economic development
Single indicators e.g. number of doctors/1000 people; infant mortality rate; % of the population with access to clean drinking water
Composite indicators such as the Human Development Index (HDI)
The Human Development Index (HDI)
Developed by the United Nations, it is a combination of 3 indicators
Health, as measured by the life expectancy at birth e.g.in 2019 it was 81.2 years in the UK
Education, as measured by a combination of the mean years of schooling that 25 year old's have received, together with the expected years of schooling for a pre-school child
Income, as measured by the real gross national income per capita at purchasing power parity (ppp)
Each indicator is given equal weighting in the index
The index ranks countries on a score between 0 & 1
The closer to 1, the higher the level of economic development & the better the standard of living
A value of < 0.550 is considered low development e.g. Chad 0.394
A value of 0.550-0.699 is considered medium development e.g. El Salvador 0.673
A value of 0.700-0.799 is considered high development e.g Thailand 0.777
A value ≥ 0.800 is considered very high development e.g. Norway 0.957
Advantages & Limitations of Using the HDI to Compare Levels of Development
The Advantages & Disadvantages Of Using the HDI For Comparison
Advantages
Disadvantages
It is a composite indicator which provides a more useful comparison metric than single indicators do
It incorporates three of the most important metrics for households i.e. health, education & income
It is widely used all over the world which provides an opportunity for meaningful comparisons
It provides a goal for governments to use when developing their policies e.g. it may help identify that the education levels are holding back improvements to the HDI & government policy can target that
It provides citizens with an understanding of how their quality of life compares to other countries
It does not measure the inequality that exists as it uses the mean GNI/capita
It does not measure or compare the levels of absolute & relative poverty that exist
For many countries it does not provide useful short-term information as gathering the data required for the calculation is difficult. This means the data often lags reality by several years
Other Indicators of Development
There are many more single indicators of economic development. These can be used to compare the relative standing of countries at any point in time. They also serve to provide targets for improving the lives of citizens. Examples include
The proportion of the male population engaged in agriculture
Energy consumption per person
The proportion of the population with access to clean water
The proportion of the population with internet access
Mobile phones per thousand people
Number of girls completing primary education
Two other useful composite indicators include
The inequality adjusted HDI (IHDI)
The Multi-dimensional Poverty Index (MPI)
Characteristics Of the IHDI & MPI
IHDI
MPI
Created in 2010 to deal with the lack of information that the HDI provides on inequality
The IHDI will be equal to the HDI value when there is no inequality, but falls below the HDI value as inequality rises
This means that the IHDI measures the level of human development when inequality is accounted for
The difference between the HDI & IHDI can be expressed as a percentage & represents the loss in potential human development due to
inequality
It provides greater insight into the differences in human development that exist in a country as opposed to the average human development
Launched in 2010 by the Oxford Poverty & Human Development Initiative at the University of Oxford
It measures the complexities of poor people’s lives, individually & collectively, each year
It tracks deprivation across three dimensions & 10 indicators: health (child mortality, nutrition), education (years of schooling, enrolment), & living standards (water, sanitation, electricity, cooking fuel, housing, assets)
It first identifies which of these 10 deprivations each household experiences
Then identifies households as poor if they suffer deprivations across 1/3 or more of the weighted indicators
It can focus in on regions, ethnicities & also any of the three dimensions making it a useful tool for policymakers & non-government organisation (NGOs) working to reduce poverty