2. Understanding and measuring economic development

Economic growth

Increase in real GDP per capita in the long-term

Economic Development

Sustainable imropve of people’s living conditions

PPP

Purchasing Power Parity = exchange rates that convert a value in one currency to another while equalizing their purchasing power

HDI

Human Development Index = multi-dimensional measure that combines per capita income with health and education

HDI - the 4 categories

HDI < 0.549 : low HD
0.55 < HDI < 0.699 : medium HDI
0.7 < HDi < 0.799 : high HDI
0.8 < HDI < 1 : very high HDI

Pros of HDI

Good data availability, multi-dimensional, inclusion of human capital

Cons of HDI

Data collection difficult, missing dimensions (school enrollment ≠ school quality), no inequality adjusted HDI, no gender specific data

IHDI

Inequality-adjusted Human Development Index = adjusts the HDI for inequality in the distribution of each dimension

GDI

Gender Development Index = uses the same 3 categories as HDI but divide women and men

MDGs

Millennium Development Goals = set of 9 goals to guide development and promote a more sustainable future before 2015

SDGs

Sustainable Development Goals = set of 17 goals established to guide development and promote a more sustainable future before 2030