Measurement of economic development

Development Economics

1. Measurement of Economic Development

2. Measurement of Economic Development E conomic development is a process of change over a long period of time. T here are several criteria or principles to measure the economic development. N one of the criteria provides a satisfactory and universally acceptable index of economic development. I t is a complex problem to answer about the measuring of economic development.

3. Measurement of Economic Development R.G. Lipsey maintains that there are many possible measures of a country’s degree of development like income per head, the percentage of resources unexploited, capital per head, saving per head and amount of social capital. C ommonly used criteria of economic development are increase in national income, per capita real income, comparative concept, standard of living and economic welfare of the community etc. R.G. Lipsey

4. Gross National Product (GNP) Gross national product (GNP) is an estimate of total value of all the final products and services turned out in a given period by the means of production owned by a country's residents. GNP is commonly calculated by taking the sum of  personal consumption expenditures , private domestic investment, government expenditure,  net exports   and any income earned by residents from overseas investments, minus income earned within the domestic economy by foreign residents. Net exports represent the difference between what a country exports minus any imports of goods and services.

5. GNP measures the total monetary value of the output produced by a country's residents. ny output produced by foreign residents within the country's borders must be excluded in calculations of GNP, while any output produced by the country's residents outside of its borders must be counted . GNP does not include intermediary goods and services to avoid double-counting.

6. Per Capita Income Per capita   income is a measure of the amount of money earned per person in a nation or geographic region. can be used to determine the average per-person income for an area and to evaluate the standard of living and  quality of life   of the population. Per capita income for a nation is calculated by dividing the country's national income by its population.

7. Physical Quality of Life Index   The Physical Quality of Life Index (PQLI) is an attempt to measure the quality of life   or well-being of a country. It considers t he value is the average of three statistics: basic literacy rate, infant mortality, and life expectancy at age one. It all equally weighted on a 0 to 100 scale. It was developed for the  Overseas Development Council   in the mid-1970s by Morris David Morris Morris David Morris

8. Human Development Index HDI is a statistic developed and compiled by the United Nations to measure and various countries' levels of social and economic development. It is composed of three principal areas of interest: mean years of schooling expected years of schooling,  life expectancy  at birth, and gross national  income per capita. This index is a tool used to follow changes in development levels over time and to compare the development levels of different countries. The computed HDI of a country is an average of indexes of each of the life aspects that are examined: knowledge and understanding, a long and healthy life, and an acceptable standard of living. T he components is normalized to scale between 0 and 1.

9. Capability Approach The capability approach also referred to as the capabilities approach is an  economic theory  conceived in the 1980s as an alternative approach to  welfare economics. In this approach,  Amartya Sen  and  Martha Nussbaum   bring together a range of ideas that were previously excluded from traditional approaches to the economics of welfare. The core focus of the capability approach is on what individuals are able to do. Amartya Sen   Martha Nussbaum  

10. Sen argued for five components in assessing capability: 1.The importance of real freedoms in the assessment of a person's advantage 2.Individual differences in the ability to transform resources into valuable activities 3.The multi-variate nature of activities giving rise to happiness 4.A balance of materialistic and no materialistic factors in evaluating human welfare 5.Concern for the distribution of opportunities within society Sen has helped to make the capabilities approach predominant as a paradigm for policy debate in human development where it inspired the creation of the UN's  Human Development Index . It became a popular measure of human development, capturing capabilities in health, education, and income

11. Gender Related Development Index   The  Gender Related Development Index  ( GDI ) is an  index designed to  measure gender equality. GDI together with the  Gender Empowerment Measure  (GEM) were introduced in 1995 in the  Human Development Report written by the  United Nations Development Program . The aim of these measurements was to add a gender-sensitive dimension to the  Human Development Index (HDI). The GDI is defined as a "distribution-sensitive measure that accounts for the human development impact of existing gender gaps in the three components of the HDI . The HDI and the GDI (as well as the GEM) were created to rival the more traditional general income-based measures of development such as  gross domestic product (GDP) and  gross national product (GNP).