Measuring Development

The level of economic development cannot be reflected in any single measure. An indicator is a measurable variable that indicates the state or level of something that is being measured. For ex GDP per capita is an indicator of the level of output or income per person. A composite indicator is a summary measure of several dimensions or goals of development.

Individual Indicators World Development Indicators (World Bank). 900 indicators providing information about: People: demography, labour, income,… Environment Economy: national accounts, trade,… States and markets: tax & trade policies, information & technology,… Global links: investment & trade, aid, financial flows,…

MDGs and indicators. The Millenium Declaration established specific goals and targets to be achieved within a period of 15 years and specifies indicators to be used to monitor country progress. Eight goals, 18 targets, 48 indicators.

Examples of individual indicators Health indicators measure attributes of populations related to health. Life expectancy at birth (average number of years of life in a population). Highest in Japan: 82 years Lowest in Zambia: 40 years Infant mortality (n. of deaths of infants until age of one, per 1000 live births). Maternal mortality (n. of women who die per year as a result of pregnancy –related causes)

Income poverty. It occurs when income falls below the poverty line: Living on less than $1.25 a day: extreme poverty Living on less than $2 a day: moderate poverty Income distribution. Measures of absolute poverty define a minimum income level. Measures of relative poverty compare the income of one group in a society with the income of another group.

A measure of the degree of inequality (equality) of income distribution is the share of total income that goes to the poorest fifth of a population. It is one of the MDGs indicators. The higher the % of income received by the poorest 20% of the population, and the closer it is to 20%, the more equal is the distribution of income.

Literacy, improved water source and improved sanitation. Adult literacy rate: % of people >=15 who can read and write (indicator 8 goal 2 MDGs). % of population with access to an improved source of water (indicator 30 of goal 7). % of population with access to improved sanitation (indicator 31 of goal 7). Demographic indicators. Population growth rates, age composition, birth rates.

Relative importance of primary, secondary and tertiary sectors. Measured using value added in each sector.

Composite indicators Since 1990, the United Nations Development Programme (UNDP) publishes the Human Development Report, which includes four composite indicators: Human Development Index (HDI) Human Poverty Index (HPI) Gender-related Development Index (GDI) Gender Empowerment Measure (GEM)

HDI It measures average achievement in three dimensions: http://hdr.undp.org/en/statistics/hdi/ A long and healthy life, measured by life expectancy at birth. Knowledge, measured by: Mean of years of schooling for adults aged 25. Expected years of schooling. A decent standard of living, measure by GDP per capita (in US$ PPP).

Each dimension expressed as a value between 0 (lowest possible value for the dimension) and 1 (highest). The composite index is the average over the three dimensions. Each country receives an HDI value from 0 to 1, and countries are ranked according to their HDI values.

Human Poverty Index (HPI) Human poverty refers to deprivations and the lack of opportunities and choices that allow individuals to lead a long, healthy and creative life with a decent standard of living, freedom and dignity. There are two HPIs, one for developing countries and one for more developed countries.

HPI in developing countries: Deprivation in longevity, measured by the probability at birth of not surviving to age 40. Deprivation in knowledge, measured by the % of illiterate adults. Deprivations in the standard of living, measured by The % of people who do not have sustainable access to safe water. The % of people who do not have access to health services. The % of children under age 5 who are underweight for their age.

HPI in developing countries: Probability at birth of not surviving to age 60 Percentage of adults lacking functional literacy skills. Percentage of people living below the nationally determined poverty line The long-term underemployment rate.