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1. Measuring Economic Development. Patterns and Processes in economic Activities. Human Development Index (HDI). Highly Indebted Poor Countries (HIPCs). Newly Industrialised (NICs). Problems. Definition. Quickly Developing. Gross Domestic Product (GDP). Developed. Least Developed (LDC).
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1. Measuring Economic Development Patterns and Processes in economic Activities
Human Development Index (HDI) Highly Indebted Poor Countries (HIPCs) Newly Industrialised (NICs) Problems Definition Quickly Developing Gross Domestic Product (GDP) Developed Least Developed (LDC) Gross National Product (GNP) Definition Factors Affecting Problems Inequalities within EU Measuring Economic Development Different levels of Development Measuring Economic Development
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
3 Regions of Economic Development • 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)
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.
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
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
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.
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.
