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Indicatorsofeconomicdevelopment 100113165956-phpapp02

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  • 1. http://www.bized.co.ukCopyright 2006 – Biz/edIndicators of EconomicDevelopment
  • 2. http://www.bized.co.ukCopyright 2006 – Biz/edIndicators of EconomicDevelopment
  • 3. http://www.bized.co.ukCopyright 2006 – Biz/edGrowth versus Development• Economic growth may be one aspect ofeconomic development but is not thesame• Economic growth:– A measure of the value of output of goodsand services within a time period• Economic Development:– A measure of the welfare of humans in asociety
  • 4. http://www.bized.co.ukCopyright 2006 – Biz/edEconomic Growth• Using measures ofeconomic growth cangive distorted picturesof the level of incomein a country – theincome distribution isnot taken into account.• A small proportion ofthe population can owna large amount of thewealth in a country.The level of humanwelfare for the majoritycould therefore be verylimited.But this could be just around thecorner!Copyright: chinagrove, http://www.sxc.huThis might be a commonpicture……Copyright: unseenob, http://www.sxc.hu
  • 5. http://www.bized.co.ukCopyright 2006 – Biz/edGrowth
  • 6. http://www.bized.co.ukCopyright 2006 – Biz/edEconomic Growth• Using measures of economic performance in terms ofthe value of income, expenditure and output• GDP – Gross Domestic Product– The value of output produced within a country during atime period• GNP – Gross National Product– The value of output produced within a country plus netproperty income from abroad• GDP/GNP per head/per capita– Takes account of the size of the population• Real GDP/GNP– Accounts for differences in price levels in differentcountries
  • 7. http://www.bized.co.ukCopyright 2006 – Biz/edEconomic Growth• High economic growth fuelled through capital spending canhide a number of underlying economic problems – how is theincome and wealth distributed? Who is doing the spendingand will it ‘trickle down’ to the poor?Shopping Mall in Saudi ArabiaCopyright : Christo Pacheco, http://www.sxc.huDubai SkylineCopyright: zchizzerz, http://www.sxc.hu
  • 8. http://www.bized.co.ukCopyright 2006 – Biz/edNational Income – Problemswith using GDP/GNP• Reliability of data?– How accurate is the data that is collected?• Distribution of income?– How is the income distributed – does a smallproportion of the population earn a high percentageof the income or is income more evenly spread?
  • 9. http://www.bized.co.ukCopyright 2006 – Biz/edNational Income – Problemswith using GDP/GNP• Quality of life?– Can changes in economic growth measure changesin the quality of life?– Does additional earnings power bring with itadditional stress, increases in working hours,increased health and family problems?• Impact of exchange rate?– Difference in exchange rates can distort thecomparisons – need to express in one currency, butwhich one and at what value?
  • 10. http://www.bized.co.ukCopyright 2006 – Biz/edNational Income – Problemswith using GDP/GNP• Black/informal economy?• Some economic activity notrecorded – subsistencefarming and barter activity,for example• Some economic activity iscarried out illegally –building work ‘cash inhand’, drug dealing, etc.• Work of the non-paid maynot be considered but maycontribute to welfare –charity work, housework,etc.It might not be pleasant, but what he finds among the refuse couldbe all he has.Title: Sierra Leone Liberia. Copyright: Photolibrary Group
  • 11. http://www.bized.co.ukCopyright 2006 – Biz/edDevelopment
  • 12. http://www.bized.co.ukCopyright 2006 – Biz/edDevelopment• Development incorporates thenotion of a measure/measures ofhuman welfare• As such it is a normative concept –open to interpretation andsubjectivity• What should it include?
  • 13. http://www.bized.co.ukCopyright 2006 – Biz/edDevelopment• Levels of poverty– Absolute poverty– Relative poverty• Inequality• Progress – whatconstitutesprogress?Our definitions of progress may be highly subjective. Whathas progress brought to native tribes people across theglobe?Title: Navajos refuse casino riches. Copyright: Stock.Xchng
  • 14. http://www.bized.co.ukCopyright 2006 – Biz/edWhat is Poverty?• Poverty is a ‘relative’ termRomanian gypsies – is this man living in poverty?Copyright: ghitulescu radu, http://www.sxc.huOr is this villager in rural China?Copyright: Mark Forman, http://www.sxc.hu
  • 15. http://www.bized.co.ukCopyright 2006 – Biz/edDevelopment• Other considerations of human welfare:• Political freedoms?• Sustenance?• Sustainable development?• Self esteem?• Proportion of activity in different sectorsof the economy:– Primary– Secondary– Tertiary
  • 16. http://www.bized.co.ukCopyright 2006 – Biz/edDevelopment• Iraqis havesupposedly beengiven their freedomfollowing theAmerican led‘Operation freedom’but has it improvedwelfare?Copyright: Photolibrary Group
  • 17. http://www.bized.co.ukCopyright 2006 – Biz/edHuman Development Index
  • 18. http://www.bized.co.ukCopyright 2006 – Biz/edHuman Development Index(HDI)• HDI – A socio-economic measure• Focus on three dimensions of humanwelfare:• Longevity – Life expectancy• Knowledge – Access to education,literacy rates• Standard of living – GDP per capita:Purchasing Power Parity (PPP)
  • 19. http://www.bized.co.ukCopyright 2006 – Biz/edOther Measures?
  • 20. http://www.bized.co.ukCopyright 2006 – Biz/edOther Measures?• How far do these other measuresreflect levels of human welfare?
  • 21. http://www.bized.co.ukCopyright 2006 – Biz/ed