Development Indicators

Development Indicators Overview

  • Key indicators of development: GDP, GPI, HDI, PQLI, GEM.

GDP Limitations

  • Population: Comparing GDP per capita between countries of differing populations (e.g., Norway vs. Argentina).

  • Inequality: GDP per capita measures standard of living but does not account for income distribution.

  • Non-Market Activities: Ignores volunteer work and household labor.

  • Environmental Costs: Does not factor in environmental damage.

  • Shadow Economy: Excludes informal economic activities like babysitting.

World GDP Ranking (2019)

  • Top Countries by GDP (billions USD): 1. United States (21,439), 2. China (14,140), 3. Japan (5,154)... 66. Ethiopia (91).

  • Note: Advanced economies are coded blue, developing economies black.

World GDP per Capita Ranking (2019)

  • Top Countries by GDP per capita (USD): 1. Luxembourg (113,196), 2. Switzerland (83,717), 3. Macao SAR China (81,152)... 66. Russia (11,163).

  • Note: Advanced economies are coded blue, developing economies black.

World GDP PPP per Capita Ranking (2019)

  • Top Countries by GDP PPP per capita (International dollars): 1. Qatar (132,886), 2. Macao SAR China (114,363), 3. Luxembourg (108,951)... 66. Maldives (23,312).

  • Note: Advanced economies are coded blue, developing economies black.

Alternatives to GDP

  • Happiness Index: Measures life satisfaction.

  • Genuine Progress Index (GPI): Assesses actual progress beyond economic growth.

  • GDP Per Capita in PPP Terms: Adjusted for purchasing power parity.

Gross National Happiness Domains

  • Key Areas: Emotional Balance, Well-being, Safety, Community, Environmental Governance, etc.

Happiness Ranking (2016-2018)

  • Top Countries: 1. Finland (7.769), 2. Denmark (7.600), 3. Norway (7.554)...

Genuine Progress Indicator vs. GDP

  • Illustrates divergence: World GDP has significantly increased since 1950, but GPI has not followed suit.

Purchasing Power Parity (PPP)

  • Definition: A method to compare the relative value of currencies by eliminating price level differences between countries.

  • Calculation: Measure the cost of a specific good in two different currencies.

GDP (PPP) Calculation Steps

  1. Identify a common basket of goods.

  2. Measure its cost in each country’s currency.

  3. Calculate PPP using the formula:

  • PPP = Cost in Country 1 / Cost in Country 2

GDP (PPP) Examples

  • Example 1: 25 cupcakes cost Rs.250 in India, $6 in the US. Calculate PPP.

  • Example 2: A Big Mac costs $5.28 in the US and $3.17 in China.

  • Example 3: An Apple MacAir laptop costs $1,199 in the US and $999 in India.

Human Development Index (HDI)

  • Components: Life Expectancy Indicators, Educational Attainment Indicators, Standard of Living Indicators.

  • Life Expectancy: High life expectancy signifies higher development level.

  • Educational Attainment: Measures average education level in the population.

  • Standard of Living: Real GDP per capita indicates the living standard.

HDI Calculation

  • Uses the formula based on actual values, maximum values, and minimum values for