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What Are the Different Types of Economic Development Indicators?

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  • Written By: Peter Hann
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  • Last Modified Date: 31 October 2016
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Economic development cannot be equated with economic growth, though growth and development are related. Economic development is more difficult to define and a number of different economic development indicators are used. The factors involved in development relate to the welfare of the population, so they are often subjective in nature. The United Nations Development Programme (UNDP) uses the Human Development Index (HDI) to measure a population's education, health and standard of living. Other economic development indicators look at people's ability to meet basic needs and achieve dignity and freedom.

The HDI examines three aims of economic development and the extent to which they have been achieved in each country. The index measures health by considering life expectancy at birth. Education is measured via the adult literacy rate and the availability of primary, secondary and tertiary education as demonstrated by school enrollment levels. The standard of living in a country is measured by per capita gross domestic product (GDP), but this is converted on the basis of purchasing power parity (PPP) to achieve a more realistic comparison of the purchasing power of consumers in different countries.

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The HDI is regarded by the UNDP as a measure of the country's people and their situation. The UNDP also analyzes human development criteria between different groups within a country, producing, for example, a gender-related development index that gives an indication of inequality between men and women. The gender empowerment measure (GEM) looks at the ability of women to take part in the political system and economic life of a country. This measures empowerment by looking at the proportion of women occupying leadership roles in the political system, business and the professions. It also considers the extent to which women are part of the workforce and looks at their share of the national income.

The Human Poverty Index (HPI) is among the economic development indicators that aim to measure how much of a country’s population does not have the chance to attain a basic level of health and education and meet basic needs. The factors taken into account include how many people in a country die before age 40, how many adults are illiterate, how many people don't have access to clean water, and how many children are malnourished. The index is expressed as a percentage, with a higher percentage indicating a greater level of poverty. Other economic development indicators include the infant mortality rate, the maternal mortality rate and income inequality, which is measured by the Lorenz curve or the Gini coefficient. The level of technology use in a country is measured by looking at indicators such as the number of Internet users per 1,000 people or the telephone landlines per 1,000 people.

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SteamLouis
Post 3

What about unemployment? That has to be an economic development indicator too right? It's also related to poverty because in places where there is a lot of unemployment, there is inevitably more poverty. Many countries have social programs to help the poor and unemployed. But I still think that these give a good idea about development. Am I wrong?

fBoyle
Post 2

In one of my courses, we had a class exercise based on economic development indicators. Education, health and business were three major areas. We looked at literacy rates, life expectancy, infant mortality.

As for businesses, there was indicator about the ease of starting a business in a country. It was measured by the amount of time required to get a business going. The longer it took, the lower the score was in economic development.

I guess this particular indicator gives an idea about how conducive the policies of a country are for business and economic growth. Naturally, if it's very difficult to start a business somewhere, there aren't going to be many businesses. This means less production, less investment, and overall less economic growth. Although economic growth doesn't always result in economic development, they are indirectly related.

ddljohn
Post 1

Aside from poverty, there are a few other wealth related indicators that we can look at to measure a country's economic development. For example, what percentage of wealth of the nation is concentrated at the top is a great way to see how wealth is distributed. Another indicator is socio-economic classes and how easy it is to move between them. For example, if it's very difficult for a poor individual to move up into the middle class in a country, we can say that this country is not very developed.

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