INDICATORS OF ECONOMIC DEVELOPMENT.pptx

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1. INDICATORS OF ECONOMIC DEVELOPMENT

2. MEANING OF INDICATOR

3. 1.GNP PER CAPITA It is the dollar value of country's final output of goods and services in year divided by total population. It reflects the average income of a country's citizens. When per capita income of a country increases for long period of time continuously, it can be said that economic development has taken place. Economists have taken per capita as an economic development indicator. It shows an increase in growth rate of country rather development. Economic development includes change in spheres beside rise in per capita. There is economic development if rate of increase in real per capita is higher than rate of growth of population. There is no sign of development if growth rate is less than population. Per capita indicates income for an individual. PER CAPITA INCOME = Total Income Total population

4. LIMITATIONS: Pe r capita income is not actual income of citizen Increase in per capita income may not raise real standard of living of masses Per capita income shows only averages Only estimates Masses will be poor if distribution of income is more unequal Difficulty in comparison due to nominal exchange value (Exchange value between two currencies) which do not reflect relative purchasing power of different currencies. Fails to take into account problems associated with basic needs. Improvement in living standards by providing basic needs can't be measured by increase in per capita income

5. 2.REAL NATIONAL INCOME National income is the total market value of all final goods and services produced by all sectors of an economy during a fiscal year. It is a macroeconomic concept. It is expressed in form of money since modern economy is a money economy. The division of global economy is based on real national income. Y = C+I+G+[x-m] Y = National Income C = Consumption by households I = Investments G = Government expenditure X = Exports M = Imports

6. National income is also an indicator of economic development. Higher income indicates higher economic development. Robert McNamara , Governor of world Bank revealed in February 1930, failure of GNP growth rate as an index of development . LIMITATIONS: Price changes should be eliminated while calculating national income. But Price variations are unavoidable. Short period rise in income does not constitute economic development Fails to take changes in population. If rise in income is accompanied with rise in population there is no development, but retardation. Doesn't reveal social costs to society. Doesn't explain distribution of income in economy Certain conceptual difficulties in measurement

7. 3.WELFARE The nation's development and social welfare are also considered to measure nation's prosperity. Economic development is increase in consumption of goods and services of individuals. “ A sustained, secular improvement in material well-being, which we may consider to be reflected in an increasing flow of goods and services “ - OKUN AND RICHARDSON LIMITATIONS : giving some importance on consumption of different individuals in p welfare index is not correct. Because consumption depends on taste and preference of individual. It differs from person to person. Caution has to be exercised with regard to composition and valuation of total output.

8. Welfare view fails to account methods of production. It sets what is produced and how much but how it is produce is not take into consideration. The expansion of output might have raised the real costs and social costs in economy. The increase in income is considerable but what if it is at cost of poor working conditions. It is not essential that with increased national income, economic welfare has gone up. Economic development is reflected in equal distribution. 4. SOCIAL INDICATORS Economists were dissatisfied by taking GNP/GNP per capita as an indicator of economic development. Economists tried to measure development in terms of social indicators.

9. GNP/GNP per capita taken into consideration, development takes long period of time. But if basic reeds are provided, it takes short period of time. GNP/GNP per capita long period improvement in poverty. Education, sanitation etc → short period affects poverty. BASIC NEEDS INDICATOR 1. HEALTH Life expectancy rate 2.EDUCATION Literacy signifying primary enrolment as % of population 3.FOOD Calorie supply per head 4.WATER SUPPLY Infant mortality rate and % of population with respect to potable water 5.SANITATION Infant mortality and % of population with respect to access to sanitation

10. UNITED NATIONS DEVELOPMENT PROGRAMME UNDP in it's first human development report defined human development as "a process of enlarging people's choices”. Human development is broad and comprehensive concept. There is no automatic link between growth and development. Economic growth is essential for human development. Human development is equally important because it is healthy and educated people who contribute to growth by productive employment and increase in income. LIMITATIONS: Problems arise in constructing composite index based on rational weighing system. No unanimity among economists as to no of and type of item to be included in such index. They involve value judgements. Social, economic and political set-up of a country will play a role in assignment of weights namely poverty, education nutrition, health Social indicators are talking about current period & do not talk about future products

11. PHYSICAL QUALITY OF LIFE INDEX PQLI was discovered by M.D. Morris in 1949. PQLI possess many challenges to GNI per Capita as a measure of development. It s a non-income indicator because it uses physical quality of life as index. PQLI is constructed relating to 23 countries for comparative Study. It is based on: Life expectancy rate Infant mortality rate Basic Literacy It measures performance in meeting basic needs such as health, nutrition, sanitation etc. PQLI is better indicator and the best than per capita income. It measures quality of life indirectly and points towards that indicator which requires immediate action.

12. LIFE EXPECTANCY: Average no of years a person is expected to live INFANT MORTALITY RATE : Ratio of no of deaths per 1000 born children in a year LITERACY : Any person above age 7 years who can read and write any one of language IMR = DEATH LESS THAN ONE YEAR NO OF LIVE BIRTHS [1000]

13. TABLE SHOWING DATA RELATED TO IMR, LITERACY AND LIFE EXPECTANCY YEAR IMR LIFE EXPECTANCY LITERACY 2011 47/1000 66.8 YEARS 74.04% 2019 30/1000 68.7 YEARS 64.7%[RURAL] 79.5%[URBAN] LIMITATIONS: Limited measure of basic needs Doesn't explain changing structure of economic and social organization Doesn't measure total welfare Equal weights given to three variables of PQLI

14. HUMAN DEVELOPMENT INDEX HDI is a modern indicator of economic development. It is a statistical tool used to measure a country's overall achievement in its social and economic dimensions. It was developed by Mahbub – Ul - Haq , Pakistan economist. UNDP incorporated in its first Human Development Report in 1990 and follows the same year after year from 1990 for measurement of human development. HDI is composite index of three social indicators: Life expectancy Adult literacy, combined gross enrolment ratio Years of schooling Real GDP per capita based on purchasing power parity

15. HDI is achievement in three dimensions namely Living a long and healthy life. Being educated Having a decent standard of living Indicators with fixed minimum and maximum values: Life expectancy at both 25 and 85 Adult literacy rate 0 % and 100% Combined gross enrolment ratio, 0% and 100 % Real GDP per capita, 100$ and 40,000$ CALCULATION OF INDIVIDUAL INDICES: INDEX = Actual value – Minimum Value / Maximum value-Minimum value

16. HDI is simple average of three dimension indices. It's value range from 0 to 1. HDI takes GNP per capita in to consideration for measurement of development. HDI measures relative rather than absolute human development. No importance is given to social and political freedom and gender inequalities. HDI provides better picture of country's development than its income alone. COUNTRY’S HDI MEASUREMNT[HDI 2013] Below 0.5 and 0.8 - Medium level human development Below 0.5 - Low level human development Above 0.8 - High level human development

17. INDIA’S HDI VALUE YEAR HDI VALUE 1990 0.427 1995 0.546 2001 0.472 2002 0.595 2007 0.612 2010 0.519 2013 0.586

18. INDIA’S RANK IN HDI 2018 – 131 out of 189 countries 2019 – 129 out of 189 countries 2020 – 131 out of 189 countries GENDER RELATED DEVELOPMENT INDEX[ GDI] GDI is an indicator of economic development. It is an index designed to measure gender inequality. GDI together with gender empowerment measure introduced in 1995 in Human development Report published by UNDP. So GDI introduced in 1990 and GEM introduced in 1995.

19. GDI is composite index which measures development of a country according to their standard of living. It measures same as HDI but also includes gender inequalities in level of achievement in basic aspects of human development. It is same as HDI but separated by gender. HIGHLIGHTS INEQUALITIES IN AREAS OF : Long and healthy life between men and women Knowledge between men and women Standard of living between men and women GDI is ratio of HDI's calculated separately females and males using same methodology as in measure of gender gap. It addresses gender gaps in life expectancy, education and incomes. The aim is to add gender sensitive dimension to HDI.

20. If there is greater inequality, GDI is less than HDI, greater difference is more inequality. Efforts are being made to reduce gender inequality. Women movements are promoting and working for gender inequality. GENDER EMPOWERMENT MEASURE Gender Empowerment Measure is measure of inequalities between men's & women's opportunities in a country. It combines inequalities in three areas:

21. Measured by men’s and women’s participation and shares in parliament seats Measured by men’s and women’s percentage shares of position as senior officials, managers, professionals Measured by men’s and women’s estimated earned income SOCIAL PROGRESSIVE INDEX This indicator measures well-being of society by observing social and environmental outcomes rather than economic factors. It based on writings of Amartya Sen, Douglass North, Joseph Stiglitz. It focuses on development indicators beyond GDP. SPI measures extent to which country provides for social and environmental needs of citizens. 54 indicators are taken to show relative performance of nation. It includes wellness, equality, inclusion, sustainability and personal freedom and safety.

22. MULTI-DIMENSIONAL POVERTY INDEX[MPI] It was introduced in 2010 and designed to illustrate many deprivations faced by most severely disadvantaged in their daily life such as poor health, lack of education, low living standard. It requires household to be deprived in multiple indicators at same time. A person in multi-dimensionally poor if weighted indicators add up to 33%.