TOPIC 3: Comparing Countries: Development Measures and Classifications

Flashcards covering key concepts from lecture notes on comparing countries, development measures, and classification systems, including definitions of GDP, GNI, HDI, and various country classification frameworks.

Comparable Development Measures

Measures designed to permit meaningful comparisons of development characteristics across different countries and over time.

Three Goals for Development Measures

To accurately describe current conditions, enable intertemporal comparison, and facilitate cross-country comparison.

Describe Current Conditions (Measurement Goal)

A measurement goal requiring data to be accurate and representative of the present state within a country.

Intertemporal Comparison (Measurement Goal)

A measurement goal requiring that the same things are measured at different points in time to observe changes within a country.

Cross-Country Comparison (Measurement Goal)

A measurement goal requiring that the same things are measured in different countries to compare performance between nations.

Gross Domestic Product (GDP)

A macro measure representing the total income or value added within a country's borders.

Gross National Income (GNI)

A macro measure representing the total income earned by a country's residents, including income from abroad.

Challenges in Measuring GDP/GNI for Current Conditions

Difficulties in accounting for household production, black markets, and intangibles like environmental quality.

Relative Purchasing Power

A measure of the value of a currency in terms of what it can buy, typically determined by identifying a basket of widely available goods and calculating their currency-adjusted cost.

Big Mac Index

An informal index created by The Economist to illustrate the challenges of measuring purchasing power across countries, based on the price of a McDonald's Big Mac.

Human Capital

A measure of a country's performance in areas like health and education, often easier to quantify than income measures but still presenting significant challenges.

Child Mortality

An example of a human capital measure, often expressed as deaths per 1,000 live births, which is used to compare population health across different countries.

UN Interagency Group for Child Mortality Estimation (UN IGCME)

A group created with the sole purpose of generating consistent, comparable estimates on child mortality, primarily based on national surveys.

Human Development Index (HDI)

A multi-dimensional index calculated annually by the United Nations Development Programme (UNDP) to rank countries based on health, education, and standard of living (per-capita GNI).

HDI Calculation

Ranks countries on a scale of 0 to 1 by aggregating three scaled indexes for health, education, and standard of living, using the geometric mean of these indexes.

Criticisms of HDI

Include high correlation of inputs with per capita GNI (limiting multidimensionality), omission of measures like environmental quality or freedom, and arbitrary substitution between inputs.

Country Classification Systems

Methods used to categorize countries based on various development measures, serving as references for policy drafting and coordinating international development efforts.

World Bank Classification System

A system that ranks economies by per capita income into categories: Low Income Country (LIC), Middle Income Countries (MIC - Lower and Upper), and High Income Country (HIC).

UNDP Classification System

A system that classifies countries based on their Human Development Index (HDI) scores, typically divided into quartiles: Low, Medium, High, and Very High Human Development.

United Nations Least Developed Countries (LDCs)

A classification for countries that meet three criteria: low income, low human capital, and high economic vulnerability, with the list updated every three years by the Committee for Development Policy.