1.
Measuring Economic
Development
PATTERNS AND PROCESSES IN ECONOMIC
ACTIVITIES
Quickly Least Highly
Newly
Industrialised Developing Developed Indebted
(NICs) (LDC) Poor
Countries
(HIPCs)
Different
levels of
Developed Development
Inequalities
Measuring Economic within EU
Development
Measuring Human
Economic Development
Development Index (HDI)
Definition
Gross National Gross Domestic
Product (GNP) Product (GDP)
Problems
Factors
Problems Affecting
Definition
Colonisation
World Patterns in Economic
Development
ECONOMIC INEQUALITY
• Distributionsof economic wealth is unequal
• Approx 20% of the worlds population has 80% of the wealth
• Clear North/ South divide
• The North controls 80% of the world’s trade and investment and, 90% of its
industry and almost 100% of its research.
• The majority of people who are in poverty live in the South
• About 1/5 of the world’s population lives on less than US$1 per day
Different levels of development
3 Regions of Economic Development
1. Regions with developed economies:
Europe, North America, Japan, Australia.
High levels of industrial activitiy
Low levels of agricultural activity
Employment is in services and manufacturing
Well-developed healthcare systems - Infant and Child
mortality rates are low
Educated population
Social/ economic equality between men and women.
Gross National Product is high and increasing (US$35,000 +)
Regions score highly on Human Development Index (HDI)
2. Regions with quickly developing economies/ NICs
South-east Asian economies e.g. Malaysia, Indonesia, China and
India; most of South and Central America e.g. Brazil and Mexico;
North African countries e.g. Egypt
Industrialised rapidly in the last 20 years
Manufacturing and services have grown
Exploitation from MNC’s looking for cheap labour is a concern.
Gross National Product is increasing.
Improving health care systems – infant mortality decreasing
Life expectancy increasing
Increasingly educated population – literacy improving
Gender inequality between men and women still exists
Middle to high score on the HDI.
3. Regions with least developed countries (LDCs)
Many African countries e.g. Zambia, Ethiopia and Sierra
Leone; some Asian countries e.g. Bangladesh
Manufacturing and services are extremely limited
Life expectancy is very low.
High levels of Poverty
Very poor healthcare - Disease is common and infant
mortality rate is extremely high
Central government is absent or corrupt
Poorly educated especially girls
Countries score poorly on the HDI
Many LDCs are heavily indebted poor countries (HIDCs)
HIPCs – 38 countries (mainly sub-Saharan Africa)
• Virtually no industrial activity, mainly subsistence farming
• Virtually no health care systems – infant mortality very high
• Life expectancy extremely low
• Increasingly educated population – literacy improving
• Gender inequality between men and women
• Gross national product (GNP) extremely low
• Human development index rating extremely low
• Poverty and disease still high
• Eligible for international debt relief measures which aim to reduce
external debts to more maneagele levels
Agricultural Employment
Industrial Production
Measuring Economic
Development
GROSS NATIONAL PRODUCT
HUMAN DEVELOPMENT INDEX
What does economic development mean?
Economic development refers to the total quality of
life of a population. It includes the standard of its
education, medical care and diet.
The greater a country’s economic development, the
better the living standard of people should be.
GROSS NATIONAL PRODUCT (GNP)
GNP is used as a measure of a country’s wealth.
The GNP of a country is the total value of all goods and services
produced in a country plus the value of goods and services
produced by companies from that country which are located
abroad.
It is measured in US dollars, so that comparisons can be made.
For example, in Ethiopia US$1 will buy far more than in the USA.
This is called Purchasing Power Parity (PPP). This converts a
national income to its equivalent in the USA.
Gross Domestic Product (GDP) is closely linked with GNP.
Value of goods and services produced in the country only.
It includes all goods and services produced by foreign
owned companies
It excludes all goods and services produced outside the
country
The average GDP per person can be calculated by dividing
the GDP by the total population of the country
GNP per capita for Top countries (PPP)
GNP per capita for bottom countries (PPP)
Problems using GNP as an indicator of
development
GNP can be misleading. It is an average figure,
hiding uneven spread of wealth and different
standards of living.
GNP is affected by the number of MNC’s in a
country. It lowers the GNP as profits from MNC’s are
used elsewhere.
GNP figures do not reflect living costs in different
countries (unless PPP is used)
Human Devlopment Index (HDI)
The HDI is a scoring system used to rank countries based
on their social and economic conditions.
‘The HDI is seen as a measure of people’s ability to live a long
and healthy life, to communicate and participate in the life of
the community and to have sufficient resources to obtain a
decent living.’
It has a range of values from 0.0 to 1.0
The closer the 1.0, the higher the value of HDI and the
better the quality of life for that country.
The HDI is based on people’s needs.
Three areas are used as a way of measuring
development:
Life expectancy
Literacy
Standard of living – purchasing power adjusted to local costs
GNI may also be included.
HDI- ‘most livable’ countries
HDI- ‘least livable’ countries
Problems using HDI as an indicator or development
HDI can hide inequalities in a country.
There is not always a direct link between having a
high HDI score and high level of GNP
Long-term changes in development only
The HDI is not a comprehensive measure.
Factors influencing HDI
Politics
Life expectancy is affected by the amount of resources governments direct towards primary health care
(preventative medicine), infant mortality and literacy levels of mothers
Aids
Aids is decimating people’s health in many parts of the world, especially Africa, partly because the political will
does not exist to tackle the problem through an education program
Water
Two billion people lack access to clean water. Even more do not have flush toilets. This exposes them to
typhoid, cholera and other major illnesses
War
Apart from the obvious effects from war, one of the long term effects is the non removal of landmines
National Debt
If a government has to cut any social program to pay off debt or interest it has a significant affect on each
person’s life and access to services.
Income per person
Human Development Index
