Single Indicators of Development (DP IB Economics)

The Multidimensional Nature of Economic Development

• The 17 Sustainable Development Goals demonstrate the complexity of the nature of economic development

• The different elements can be separated into three categories: economic, social and environmental

• Sustainable economic development occurs at the intersection of all three and is represented in the diagram below

Sustainable economic development is a multi-dimensional concept incorporating economic growth, environmental care and social progress 

• Viable refers to the fact that the combination of economic and environmental progress is happening with some care, however it is not sustainable in the long term

• Bearable refers to the fact that the interaction of society and the environment is happening with some thought, however it is still not sustainable in the long term

• Equitable refers to the fact that the interaction of the economy and society is happening with some attention to well-being, however it is still not sustainable in the long term 

• Due to this complexity, elements of economic development can be measured using single or composite indicators

Single Indicators of Economic Development

• A single indicator is one factor, such as GDP per person (capita), used to measure the development of a country

• Single indicators measures only one development characteristic within a country
   

1. GDP/GNI per person (per capita) at PPP

• Real GDP is the value of all goods/services produced in an economy in a one-year period - and adjusted for inflation

  • For example, if nominal GDP is £100bn and inflation is 10% then real GDP is £90bn
     

• GDP per capita = GDP / the population

  • It shows the mean wealth of each citizen in a country

  • This makes it easier to compare standards of living between countries: 

    • For example, Switzerland has a much higher GDP/capita than Burundi
       

• Gross national income (GNI) measures the income earned by citizens operating outside of the country + the GDP

  • Many citizens employ their resources outside of a country's borders - and then send the income home
     

• Purchasing power parity (PPP) is a conversion factor that can be applied to GDP, GNI and GNP

  • PPP calculates the relative purchasing power of different currencies

  • It shows the number of units of a country's currency that are required to buy a product in the local economy, as $1 would buy of the same product in the USA

  • The aim of PPP is to help make a more accurate standard of living comparison between countries where goods/services cost different amounts
     

• Using real GDP/Capita provides better information than real GDP as it takes population differences into account

• Using real GNI/capita is a more realistic metric for analysing the income available per person than GDP/capita

• Using GDP/GNI per person (per capita) at PPP allows for comparisons between countries which take into account the substantial differences in the cost of living
   

2. Health and education indicators

• Multiple single indicators for health and education can provide useful data for comparisons between countries

• Typical single health indicators include:

  • Infant mortality rate

  • Life expectancy

  • Number of doctors per 1,000 of the population

  • Diabetes incidence

• Typical single education indicators include:

  • Youth literacy rate

  • Adult literacy rate

  • Mean years in school

  • Ratio girls/boys in school

  • Math achievement 8th grade
     

3.  Economic/social inequality indicators

• Typical single economic and societal indicators include:

  • The Gini Coefficient

  • Murders per 1000 of the population

  • Percentage of women in national parliaments
     

4. Energy indicators

• Typical single energy indicators include:

  • Coal consumption per person

  • Electricity generation per person

  • Residential electricity usage

  • Oil consumption per person
     

5. Environmental indicators

• Typical single environmental indicators include:

  • CO₂ emissions per person

  • Total CO₂ emissions

  • Agricultural water withdrawal

  • Primary forest area