The document discusses various economic development indicators and indices used to measure a country's level of development, including per capita income, GDP, GNP, GDI, and GNI. It highlights the differences between developed and developing countries in terms of these measures, as well as the impact of inflation, unemployment, and wealth inequality. Additionally, it outlines the Human Development Index (HDI) and related measures that account for disparities in education, health, and income.

1. Economic Development Indicators
Development Indices
Human Develop Index

2. Studying development is about measuring how developed one
country is compared to other countries, or to the same country
in the past. Development measures how economically,
politically, socially, culturally or technologically advanced a
country is. There are a few indices and economic development
indicators to measure development.

3. Per Capita Income
Gross Domestic Product (GDP)
Gross National Product (GNP)
Gross Domestic Income (GDI)
Gross National Income (GNI)
Inequality of wealth
Inflation
Unemployment

4. Per capita income or average income measures the average income
earned per person in a given area (city, region, country) in a given
time period.
Total Income
———————Total Population
Higher per capita income means higher standard of living. So,
developed countries have higher per capita income relative to
developing countries.

5.  Gross domestic product (GDP) is a monetary measure of the value of all
final goods and services produced in a period (quarterly or yearly). Also
known as Nominal GDP.
The economic worth of all goods and services produced in a given
year, adjusted as per changes in the general price level is known as
Real GDP.
Nominal GDP is the GDP without the effects of inflation or
deflation, whereas, you can arrive at Real GDP only after giving
effects of inflation or deflation.

6. There is another formula for measuring GDP
GDP = C + I + G + Nx
C = Consumer Spending
I = Investment by Businesses
G = Government Spending
Net Exports = Nx = (X- M) = Exports – Imports
Higher GDP also means higher standard of living. Thus, Developed
countries have higher GDP.

7. Gross national product (GNP) is the market value of all the products
and services produced in one year by labor and property supplied by the
citizens of a country.
It is equal to GDP plus any factor income earned by residents from
overseas investments minus factor income earned within the domestic
economy by overseas residents.
GNP = GDP + Net factor income inflow from abroad – Net factor
income outflow to foreign countries.

8. Factor income is income received from the factors of production i.e.
land, labor, capital and organization. Factor income on the use of land
is called rent, income generated from labor is called wages , income
generated from capital is called interest and income earned by
organization is called profit.
Developed countries have higher GNP relative to developing
countries.

9. The sum of all income earned while producing goods and services
within a nation's borders is called Gross Domestic Income (GDI)
GDI = rental income + interest income + profits + wages + income tax
+ dividends.
Developed countries have higher GDI relative to developing countries.

10. Theoretically, GDI should equal GDP.
But GDP is calculated based on expenditure, difference usually exists.
The market value of goods and services produced often differs, because
of measurement errors, from the amount of income earned to produce
them.

11. The gross national income (GNI) is the total domestic and foreign
output claimed by residents of a country, consisting of gross domestic
product (GDP) plus incomes earned by foreign residents, minus income
earned in the domestic economy by nonresidents.
GNI = GDP + Net compensation receipts + Net property income
receivable + Net taxes (minus subsidies).
Developed countries have higher GNI relative to developing countries.

12. For GNI calculation we have to includes Net taxes (minus subsidies)
While GNP formula does not include it.

13. Wealth inequality (also known as the wealth gap) refers to the
unequal distribution of assets among residents of a country.
Wealth includes the values of homes, automobiles, personal valuables,
businesses, savings, and investments.
 Developed countries have low wealth inequality.

14.  Inflation is an increase in the general price level of goods and services
in an economy over a period of time.
When the price level rises, each unit of currency buys fewer goods and
services. Consequently, inflation reflects a reduction in the purchasing
power of the currency.
 Deflation is the decrease in the general price level of goods and
services in an economy over a period of time.

15. Inflation is caused when goods and services are in high demand,
creating a drop in availability. Consumers are willing to pay more for
the items they want, causing manufacturers and service providers to
charge more.
Deflation occurs when too many goods are available or when there is
not enough money circulating to purchase those goods.
Developed countries try to maintain a balance between inflation and
deflation.

16. Unemployment occurs when people who are without work are actively
seeking work.
The unemployment rate is a measure of the prevalence of
unemployment and it is calculated as a percentage by dividing the
number of unemployed individuals by all individuals currently in
the labor force.
No. of unemployed people
——————————— x 100
No. of people in labor force
Labor Force is all people who supply labor for the production of goods
and services during a specified period. It includes both the employed
and the unemployed.
Developed countries have relatively low unemployment rate.

17. Pakistan being a developing country, its economy is in recession and it
has high inflation and unemployment rate.
Recession is a significant decline in activity across the economy,
lasting longer than a few months.
Pakistan also have relatively lower per capita income,GDP,GNP,GDI
and GNI relative to developed countries.

18. Studying development is about measuring how developed one
country is compared to other countries, or to the same country
in the past. Development measures how economically, socially,
culturally or technologically advanced a country is. There are a
few indices and economic development indicators to measure
development.

19. The Human Development Index (HDI)
measures the average achievements in a country in three basic
dimensions of human development: life expectancy, education,
and income per capita. To enable cross-country comparisons,
the HDI is, to the extent possible, calculated based on data from
leading international data agencies and other credible data
sources available at the time of writing.

20. The Inequality-adjusted Human Development Index (IHDI) adjusts
the Human Development Index (HDI) for inequality in distribution of
each dimension across the population. The IHDI accounts for
inequalities in HDI dimensions by “discounting” each dimension’s
average value according to its level of inequality. The IHDI equals the
HDI when there is no inequality across people but is less than the HDI
as inequality rises. In this sense, the IHDI is the actual level of human
development (accounting for this inequality), while the HDI can be
viewed as an index of “potential” human development (or the
maximum level of HDI) that could be achieved if there was no
inequality. The “loss” in potential human development due to
inequality is given by the difference between the HDI and the IHDI
and can be expressed as a percentage.

21. The Gender Inequality Index (GII) reflects women’s
disadvantage in three dimensions—reproductive health,
empowerment and the labour market. The index shows the loss
in human development due to inequality between female and
male achievements in these dimensions. It ranges from 0, which
indicates that women and men fare equally, to 1, which
indicates that women fare as poorly as possible in all measured
dimensions.

22. The Multidimensional Poverty Index (MPI) identifies
multiple deprivations at the individual level in health,
education and standard of living. It uses micro data from
household surveys, and—unlike the Inequality-adjusted
Human Development Index—all the indicators needed to
construct the measure must come from the same survey. Each
person in a given household is classified as poor or nonpoor
depending on the number of deprivations his or her household
experiences.

23. The Human Development Index (HDI) is a composite statistic
of life expectancy, education, and income per capita indicators,
which are used to rank countries into four tiers of human
development. A country scores higher HDI when the life
expectancy at birth is longer, the education period is longer, and
the income per capita is higher. The HDI was developed by the
Pakistani economist Mahbub ul Haq working alongside Indian
economist Amartya Sen, often framed in terms of whether people
are able to "be" and "do" desirable things in their life

24. Dimensions and calculation
Human Development Report(HDI) combines three
dimensions:
A long and healthy life: Life expectancy at birth
Education index: Mean years of schooling and Expected years
of schooling.
A decent standard of living: GNI (Gross National Income) per
capita

25. Life Expectancy Index (LEI)
LE: Life expectancy at birth
LEI is 1 when Life expectancy at birth is 85 and 0 when Life
expectancy at birth is 20.

26. Education Index (EI)
Mean Years of Schooling Index (MYSI)
MYS: Mean years of schooling (Years that a person 25 years-of-age or
older has spent in schools)
Fifteen is the projected maximum of this indicator for 2025.
Expected Years of Schooling Index (EYSI)
EYS: Expected years of schooling (Years that a 5-year-old child will spend in
schools throughout his life)
Eighteen is equivalent to achieving a master’s degree in most countries.

27.  Income Index (II)
GNIpc: Gross national income at purchasing power parity per
capita
II is 1 when GNI per capita is $75,000 and 0 when GNI per
capita is $100.

28. Finally, the HDI is the geometric mean of the previous three
normalized indices: