Economic Growth & Development (AQA A Level Economics)

The Difference Between Growth and Development

• Economic development is the sustainable increase in living standards for a country, typically characterised by increases in life span, education levels, and income

• Economic growth is defined as an increase in output and does not involve a change in structure in society. Measured using GDP, GNP, etc

The Main Characteristics of Less-developed Economies

• Less developed economies have many similar characteristics which slow down the rate of economic development
  
  

Characteristics of Less-developed Economies

The Human Development Index (HDI)

• 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 include indicators such as the Human Development Index (HDI), the Gender Inequality Index (GII), Inequality Adjusted Human Development Index (IHDI), and the Happy Planet index (HPI)
    

The Human Development Index (HDI)

• Developed by the United Nations, it is a combination of 3 indicators

 Diagram: The Human Development Index

The components of the Human Development Index
 

1. Health, as measured by the life expectancy at birth e.g.in 2019 it was 81.2 years in the UK

2. 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

3. 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 and the better the standard of living

The Human Development Index scores from 1990 to 2021 (Source: UNDP Data Centre)
 

• A value of < 0.550 is considered low development, e.g. Senegal was at 0.514 in 2021

• A value of 0.550-0.699 is considered medium development, e.g.Bangladesh was at 0.667 in 2021

• A value of 0.700-0.799 is considered high development; e.g Thailand was at 0.777 in 2021

• A value ≥ 0.800 is considered very high development, e.g. Austria was at 0.918 in 2021

Evaluating the Different Approaches used to Measure Development

• All development indicators have limitations

• Due to the multi-dimensional nature of economic development, it is necessary to use a range of indicators in order to gain insights into the many dimensions of quality of life, well-being, human development and happiness

• Composite indicators provide better insight than single indicators

• Single indicators can be useful in targeting just one aspect - or in prioritising different aspects of development

• Qualitative data is used to measure many aspects of economic development and this can be subject to bias and errors in data interpretation

• It requires time to gather qualitative data and this means that the data often lags reality by several years

• Data collection and statistical reporting is subject to political agendas and often the data presented has to be questioned in light of these e.g. many Middle East countries moved from the bottom third to the top third in the Gender Inequality index (GII) in 2017, a very unlikely transition in such a short time period
   

The Advantages and Disadvantages of Using the HDI