Measures of Development

Topics: Human Development Index, Gross domestic product, United Nations Pages: 6 (2171 words) Published: September 19, 2012
In order to evaluate the main measures of development and the most appropriate for Zambia’s development, this paper will discuss the main measures of development for better understanding. The paper will also discuss how these measures can be useful in measuring development and also the limitations they face. Thereafter, the conclusion will be drawn according to the possible findings presented in this essay. The main measures of development discussed include Income Per Capita and the Human Development Index (HDI). Development is a dynamic concept that does not have a standard universal definition; it means different things to different people in different situations. Scholars and theorists have given various descriptions of what they think development is. According to Michael Todaro, he described development as “a perceived multidimensional process involving the re-organization and re-orientation of entire economic and social systems. In addition to improvements in incomes and outputs, it typically involves radical changes in institutional, social and administrative structures as well as in popular attitudes and, in many cases, even customs and beliefs.” (Todaro, 1982:56) Dudley Seers on the other hand described development as the reduction in unemployment, poverty and inequality in a society. Such are examples of the differences that are there when describing development, while Todaro speaks of development from an economic point of view Seers describes it from a more social aspect. In the field of development studies an indicator of how countries and regions are progressing is needed, and in the past and present income per capita has been useful. Income per capita is the measure of a country’s national income divided by the number of people in that nation. Income per capita cannot consistently predict human development or even indicate how people are living since there are many other variables that play a role when looking at human welfare. Income per capita has shown to have high correlation with human development factors such as access to health care and education and as a consequence higher life expectancy and literacy (Ravalion, 1997, McGillivray, 1991, Summers and Pritchett, 1996)

Before Income Per Capita can be explained it will be important to first understand what Gross National Product (GNP) and Gross Domestic Product (GDP) are. Gross National Product (GNP) is the total value of final goods and services produced by a nation in a year, plus income earned by its citizens (including those located abroad), minus income of non-residents located in the country. Basically, GNP measures the value of goods and services that the country’s citizens produced regardless of their location. Gross Domestic Product (GDP) on the other hand is the total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports. There is an important differentiation between the two concepts; GDP includes only goods and services produced within the geographic boundaries of the country regardless of the producer’s nationality while GNP doesn’t include goods and services produced by foreign producers but does include goods and services produced domestic firms even in other countries. Strengths of Income Per Capita

Compared to other measures in the development field, income per capita is a fairly straightforward measure to calculate and to use. GDP and GNP data is compiled by various sources and is therefore relatively reliable in terms of calculation and accuracy despite some problems. Income per capita for countries or regions can be portrayed as a single number and is therefore simple to use. It can also be indicative of rises in health and education, which helps when trying to rank countries and compare them to each other. GDP data is especially easy to obtain compared to the Human...
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