<MEASURING DEVELOPMENT >

--IB GUIDE--

"Why is this unit needed?"

"In the new 'SL/HL' Paper 2, each case study focuses on a single country and includes 2-3 tables of data containing 'Economic data' and 'Development data'."

"Below is the M24 & 25 paper 2, have a quick browse and you will see the structure, what do you notice?"

Economics_paper_2__TZ1_HLS 24.pdf

Economics_paper_2_TZ1_HLSL.pdf

--GROWTH VS DEVELOPMENT--

⚠️"Be very careful to not get these two confused, don't solely define both in terms of just increases in GDP, as development is referring to many other indicators"⚠️
ECONOMIC GROWTH refers to INCREASES in OUTPUT (REAL GDP) overtime and is often calculated on a PER CAPITA basis.
ECONOMIC DEVELOPMENT refers to a PROCESS overtime which culminates in IMPROVED STANDARDS OF LIVING.

--REDEFINING DEVELOPMENT--

Therefore when defining development we need to INCORPORATE NUMEROUS DIMENSIONS that contribute to IMPROVEMENTS IN THE STANDARD OF LIVING OF THE POPULATION, such as INCREASED ACCESS TO NECESSITIES, EDUCATION, HEALTHCARE etc. which in turn require specific quantifiable indicators to be identified in order to MEASURE CHANGES sand subsequent DEVELOPMENT.
But what DIMENSIONS? WHAT INDICATORS?

--SINGLE INDICATORS--

--GDP PER CAPITA v GNI PER CAPITA--

--GDP PER CAPITA--

GDP PER CAPITA refers to the TOTAL $ VALUE OF DOMESTICALLY PRODUCED OUTPUT within a particular country REGARDLESS OF the OWNERSHIP of the FACTORS OF PRODUCTION, divided by the POPULATION.
"Any idea why Lesotho has a significantly HIGHER GNI than GDP?"

--GNI PER CAPITA--

GNI PER CAPITA refers to the TOTAL LEVEL OF INCOME RECEIVED by NATIONALS of a particular country REGARDLESS of their LOCATION IN THE WORLD, divided by the POPULATION.
"Any idea why Ireland has a significantly LOWER GNI than GDP?"

"You can see below that both measures are often very similar."

"WHY WILL GNI FALL RELATIVE TO GDP?"

"This is the case of ireland that has significant repatriation of profits from MNCs based there."

--FACTOR INCOME PAID ABROAD > FACTOR INCOME FROM ABROAD--

When a country has relatively more workers from other countries (labour) who send part of their wages back home or foreign corporations (capital) that send their profits back home, this INCREASES FACTOR INCOME PAID ABROAD (OUTFLOWS), which are excluded from the country’s GNI but are included in GDP, this GDP > GNI
In such cases, domestic incomes received on average (GNI per capita) are lower than the value of output produced in the country (GDP per capita).

"WHY WILL GNI/GNP RISE RELATIVE TO GDP?"

"This is the case of Lesotho that receives significant remittances from its nationals working as miners in neighbouring South Africa."

--FACTOR INCOME FROM ABROAD > FACTOR INCOME PAID ABROAD--

On the other hand, inflows of money into a country from workers abroad or from corporations located abroad increase the size of GNI/GNP relative to GDP, making domestic incomes on average (GNI per capita) higher than the value of output produced in the country (GDP per capita). which are excluded from the country’s GNI/GNP but are included in GDP, this GDP > GNI/GNP
It follows therefore that GNI per capita is a better indicator of the standards of living of a country because it represents income per person received by the residents. GDP per capita is a better indicator of the level of output per person produced in a country.

--GDP PER CAPITA @ PPP--

"Hay, our GDP per capita is higher than yours, so we must have a better standard of living right?"

GDP @ PURCHASING POWER PARITY (PPP) refers to the level of GDP PER CAPITA ADJUSTED FOR DIFFERENCES IN COSTS OF LIVING BETWEEN COUNTRIES as represented by THE DIFFERENCE IN PRICE OF A FIXED BASKET OF GOODS.
It is a better gauge of living standards WHEN COMPARING COUNTRIES as it shows the ABSOLUTE PURCHASING POWER OF THE AVERAGE INCOME in terms of the number of CONSUMER GOODS that can be purchased.
TASK:
"Find a real-world example of a country that ranks below another country in terms of GDP PER CAPITA, but above them in terms of GDP PER CAPITA @ PPP."

--HEALTH INDICATORS--

"OUR GDP PER CAPITA IS HIGHER THAN YOURS, SO WE MUST HAVE A HIGHER LIFE EXPECTANCY RIGHT?"

LIFE EXPECTANCY AT BIRTH refers to the AVERAGE YEARS OF LIFE IN A POPULATION.
INFANT MORTALITY refers to the NUMBER OF INFANT DEATHS, PER 1000 LIVE BIRTHS.
MATERNAL MORTALITY refers to the NUMBER OF BIRTHING WOMEN THAT DIE PER 100,000 LIVE BIRTHS.
TASK: Find a real-world example of a country that ranks below another country in terms of GDP PER CAPITA, but above them in terms of LIFE EXPECTANCY.

--CAN LIFE EXPECTANCY BE HIGH DESPITE LOW GNI?--

Yes! If...

Health services such as CHILDHOOD IMMUNISATION, the PROVISION OF HEALTH EDUCATION, and PREVENTION OF COMMUNABLE DISEASES are adequately provided.
These basic health services are ACCESSIBLE to the ENTIRE POPULATION regardless of income.
S
Adequate diet without JUNK FOODS
Good level of education

--EDUCATION INDICATORS--

ADULT LITERACY RATE refers to THE % OF THE POPULATION WHO CAN READ AND WRITE (Generally, "literacy" also encompasses "numeracy", the ability to make simple arithmetic calculations). Countries by literacy rate
PRIMARY SCHOOL ENROLMENT.
SECONDARY SCHOOL ENROLMENT.

--ENERGY INDICATORS--

EXAMPLES WITH A SOCIAL DIMENSION include:
- - % OF THE POPULATION WITHOUT ELECTRICITY.
  - SHARE OF HOUSEHOLD INCOME SPENT ON FUEL.
EXAMPLES WITH AN ECONOMIC DIMENSION include:
- - ENERGY USE PER CAPITA.
  - RENEWABLE SHARE OF ENERGY CONSUMPTION.
EXAMPLES WITH AN ENVIRONMENTAL DIMENSION include:
- - AIR POLLUTION CAUSED BY ENERGY PRODUCTION.
  - RATE OF DEFORESTATION FOR ENERGY USE.

--ENVIRONMENTAL INDICATORS--

CO2 EMISSIONS PER UNIT OF GDP.
BIRD/FISH/ANIMAL SPECIES THREATENED.
OZONE LAYER DEPLETION.
...

--INFRASTRUCTIRE INDICATORS--

GO HERE

--HUMAN DEVELOPMENT INDEX (HDI)--

WIKI | HDR | OUR WORLD IN DATA | INVESTOPEDIA

--GENDER INEQUALITY INDEX (GII)--

WIKI | HDR | OUR WORLD IN DATA

--INEQUALITY ADJUSTED HDI (IHDI)--

HDR | WIKI

--HAPPY PLANET INDEX--

WIKI

--LIMITATIONS--

--CONFLICTING PRIORITIES--

--STATISTICAL INACCURACIES--

--ECONOMIC GROWTH => DEVELOPMENT--

--DOES GROWTH lead to DEVELOPMENT?--

ECONOMIC GROWTH implies greater output and income (Real GDP per capita), which allows society to better satisfy its wants and needs, likely through GREATER TAX REVENUE and LIKELY SPENDING ON MERIT GOODS however due to various factors ranging from INCORRECT POLICY to CORRUPTION these gains DO NOT GUARANTEE DEVELOPMENT as a WHOLE.
Indeed there are numerous examples of countries with HIGH GROWTH rates but LOW LIVING STANDARDS.

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