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Measures of Development (Edexcel A Level Economics A)

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Steve Vorster

Written by: Steve Vorster

Reviewed by: Jenna Quinn

Measures of Development

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

  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 and 1

    • The closer to 1, the higher the level of economic development and 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 and 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 and 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 and 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 and 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 and 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 and IHDI can be expressed as a percentage and 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 and Human Development Initiative at the University of Oxford

  • It measures the complexities of poor people’s lives, individually and collectively, each year

  • It tracks deprivation across three dimensions and 10 indicators: health (child mortality, nutrition), education (years of schooling, enrolment), and 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 and also any of the three dimensions making it a useful tool for policymakers and non-government organisation (NGOs) working to reduce poverty

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    Author
    Reviewer
    Steve Vorster

    Author: Steve Vorster

    Expertise: Economics & Business Subject Lead

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.

    Jenna Quinn

    Author: Jenna Quinn

    Expertise: Head of New Subjects

    Jenna studied at Cardiff University before training to become a science teacher at the University of Bath specialising in Biology (although she loves teaching all three sciences at GCSE level!). Teaching is her passion, and with 10 years experience teaching across a wide range of specifications – from GCSE and A Level Biology in the UK to IGCSE and IB Biology internationally – she knows what is required to pass those Biology exams.