Measuring Development

Argument:Over time, capitalist economic systems

inevitably develop increasing inequality within a population because factors of production such as capital, land, and entrepreneurship become concentrated in the hands of the wealthy.

Does GDP per capita give a reasonable estimate of the welfare of a nation’s population?

Measuring inequality: The Lorenz Curve

The further the Lorenz Curve is from midpoint line, the more inequality that exists

http://content.answers.com/main/content/img/oxford/Oxford_Geography/0198606737.lorenz-curve.1.jpg

Gini Index

• Higher Gini Index # = Higher Inequality

Gini CoefficientGini Coefficient = A/(A + B)

• Range 0-1If A is small because thereis little inequality in the country, the coefficient will be close to zero.

Real World Approximate Range 0.25 (Denmark) to 0.70 (Namibia)

Gini IndexGini Index =Gini Coefficient [A/(A + B)] x 100

• Range 0-100

Namibia 70.7South Africa 65Philippines 45.8United States 45Japan 38.1India 36.8South Korea 31.3Sweden 25

Choose two countries below, draw a Lorenz Curve for each on the same graph to compare inequality among their citizens, and use it to explain (in a brief paragraph) whether income inequality tends to be a bigger issue among MEDCs or LEDCs.

• 1Namibia70.7• 2South Africa65.0• 3Lesotho63.2• 4Botswana63.0• 5Sierra Leone62.9• 6Central African Republic61.3• 7Haiti59.2• 8Colombia58.5• 9Bolivia58.2• 10Brazil56.7• 11Guatemala55.1• 12Honduras53.8• 13Hong Kong53.3• 14Paraguay53.2• 15El Salvador52.4• 16Chile52.4• 17Panama51.0• 18Papua New Guinea50.9• 19Zambia50.8• 20Niger50.5

• 21Swaziland50.4

• 22Gambia, The50.2

• 23Zimbabwe50.1

• 24Dominican Republic49.9

• 25Peru49.6

• 26Sri Lanka49.0

• 27Mexico48.2

• 28Costa Rica48.0

• 29Singapore47.8

• 30Madagascar47.5

• 31Mozambique47.3

• 32Nepal47.2

• 33Uruguay47.1

• 34Ecuador46.9

• 35Rwanda46.8

• 36Philippines45.8

• 37Uganda45.7

• 38Jamaica45.5

• 39United States45.0

• 40Cameroon44.6

Does foreign direct investment by multinational corporations (MNCs) improve the welfare of the citizens of developing countries or does it lead to increased inequality among citizens?

Does investment by MNCs appears to be benefitting the typical citizen in each country?

Developing Countries• Brazil 56.7• China 41.5• Mexico 48.2• Thailand 43• Malaysia 44.1• India 36.8

How should we define development given the fact that our definition will guide economic policy?

Economic Growth vs Development

Growth

Economic DevelopmentDevelopment: Where increases in real GDP per capita are accompanied by increases in standards of living

Increases in welfare

Increases in human freedom

If we don’t know what development is, how do we measure it?

2000 UN Millenium Development Goals

HDIHuman Development Index

Composite Index:

• Health Life Span

• EducationLiteracy + School enrolment

• GDP/capita

Anomalies

• Saudi Arabia- 44th GDP/capita, 77th HDI

South Africa

• 52nd GDP/capita, 120th HDI

Ecuador

• 112th GDP/capita, 82nd HDI

Sweden

• 20th GDP/capita, 6th HDI

Zimbabwe

• 125th GDP/capita, 145th HDI

Gender MeasurementsUN Millenium Goals

Goal 3: Promote gender equality and empower womenTarget 4: Eliminate gender disparity in primary and

secondary education, preferably by 2005, and in all levels of education not later than 2015

Ways of Measuring:-Ratio of girls to boys in primary, secondary and tertiary

education-Ratio of literate women to men, 15–24 years old-Share of women in wage employment in the non-

agricultural sector-Proportion of seats held by women in national parliament

Gender Measurements

Gender-related Development Index (GDI)• GDI = HDI adjusted for inequality between

men and women– If GDI is lower than HDI, more inequality

Gender Empowerment measure (GEM)• % of women in leadership, management,

and parliament positions• Share of national income

HPIHuman Poverty Index

Proportion of people not meeting a basic level of each of the HDI goals:

% who do not reach age 40% of adults who are illiterate% of pop without access to safe water + %

of kids who are underweight

• Human Poverty Index Map

GPI Genuine Progress Indicator

Website explaining GPI

Review

1. What is development?

2. How is development measured?