Measuring Development

What development actually means

**Development** is the progress a country has made in economic growth, in the wellbeing of its people, and in the use of its resources. It is not the same thing as being rich. **The development gap** is the difference in development between the richest and poorest countries. This module is about **measuring** it: which indicators are used, what each one shows, and why no single one is enough. Why the gap exists, and what is done to reduce it, are separate parts of this topic. One idea runs through everything here, and it is arithmetic rather than opinion: **an average divides a total by a population, so it can tell you nothing about how that total is shared.** Every limitation in this module follows from that.

Four ways to measure it

Two economic, two social. Note which one AQA names, because it is not the one every textbook uses.

Match each measure to what it tells you

GNI or GDP?

A question on this specification asks about GNI per capita. What is the difference between GNI and GDP, and why does it matter which you name?

• GNI adds net income earned abroad to GDP, so the two differ wherever wages or profits cross borders in quantity, and this specification names GNI
• They are two names for the same thing
• GNI is already per person and GDP is not
• GNI includes social measures and GDP does not

Work out GNI per head

A country has a Gross National Income of **$96 billion** and a population of **8 million**. What is its GNI per capita, in dollars?

Why one number misleads

The specification does not just want you to know that a single indicator is limited. **It wants you to explain WHY**, and the reason is arithmetic. **A mean divides a total by a population.** That operation destroys all information about how the total is distributed. Two countries with identical GNI per capita can be completely different places, and the figure cannot distinguish them. **Three specific things a single economic measure hides:** - **Inequality** - who actually receives the income - **What the money buys** - the same figure goes further where prices are lower - **Everything non-economic** - health, education, safety, rights **That is what composite measures are for.** HDI combines income with education and life expectancy, so a country cannot look developed on income alone while its people are poorly educated or dying young. **It does not remove the averaging problem** - HDI is still built from averages - **but it stops any one dimension standing in for the whole.**

What a single measure hides

Select the TWO limitations of using GNI per capita on its own that would earn marks.

• It is an average, so it says nothing about how the income is distributed and can be raised by a wealthy minority
• It measures nothing except income, so health, education and quality of life are invisible to it
• It is difficult to calculate
• It can only be measured once every ten years

Money and life

Economic and social indicators answer different questions, which is why a full answer uses both.

Measuring the gap

The economic indicator named by this specification is _____ per capita, which differs from GDP because it includes income earned _____. Social indicators include the literacy rate and _____. Any single measure is limited because it is an _____, which says nothing about how the total is shared. A composite measure such as _____ addresses this by combining economic and _____ data.

The average that hides a country

A country has **10 million** people. **1 million** of them earn **$50,000** a year; the other **9 million** earn **$2,000**. What is the MEAN income per person, in dollars? Look at your answer against what nine people out of ten actually earn.

Indicator drill

Five quick questions on the indicators. Three lives.

Why HDI is better, answered

**"Explain why a composite measure such as HDI gives a better picture of development than GNI per capita alone. (6 marks)"** "GNI per capita is a mean: a national total divided by the population. **That operation destroys the information about how the total is shared**, so a country where a small wealthy minority holds most of the income can record the same figure as one where income is spread evenly. The two are very different places and the indicator cannot tell them apart. **It is also purely economic.** Health, education, safety and rights do not appear in it at all, and those are what most people would call development. **HDI addresses the second problem directly** by combining income with education and life expectancy, so no country can look developed on income while its people are poorly educated or dying young. Life expectancy is particularly useful here because **a wealthy minority cannot raise it the way it raises a mean income: nobody lives several lifetimes.** **It does not solve the first problem.** HDI is still built from averages, so a very unequal country can still score reasonably. A full picture needs a measure of inequality alongside it." **Notice the last paragraph.** Conceding what HDI does NOT fix is what lifts this from a recited advantage to an evaluation, and it is where the top marks are.

Spot what the average hides

A description of a country. Tap the TWO details that show why its GNI per capita gives a misleading impression.

• The country has a GNI per capita of about $12,000, placing it in the middle of the world table.
• Almost all of that income comes from oil exports controlled by a small number of companies and families
• Its capital city has modern hospitals and universities.
• In the rural areas where most of the population lives, adult literacy is under 40% and life expectancy is fifteen years lower than in the capital
• The currency has been stable for a decade.

Choosing a measure

You are asked to compare the development of two countries. Work through which measures to use.

• You have GNI per capita for both. Is that enough to compare them?
• One country has a much higher GNI per capita but a much lower life expectancy. What does that combination suggest?
• You decide to use HDI. What should the answer still acknowledge?

Your turn: measure a country

A country has a GNI of $150 billion, a population of 25 million, adult literacy of 62% and a life expectancy of 61 years. Assess its level of development.

• Calculate its GNI per capita, showing your working
• State what that figure does and does not tell you about the people who live there
• Explain what the two social indicators add that the economic one cannot supply
• Explain why a composite measure such as HDI would improve the picture, and name one thing it would still not show