4.8 - Measuring Development

Question 1

Define Real GDP per capita

Answer 1

Real GDP/Population

Question 2

Define real GNI per capita

Answer 2

Real GDP + net property income = Real GNI
Real GNI/Population = Real GNI per capita

Question 3

List the strengths of real GDP/GNI per capita

Answer 3

• An objective measure of welfare.
• A country with higher GDP/GNI per capita is likely to be more developed because it will have higher household incomes
• Widely recognized and accepted

Question 4

List the weaknesses of real GDP/GNI per capita

Answer 4

• Does not take into account all of the variables that affect welfare and development, such as healthcare and education.
• It is an average so does not account for income inequality.
• Does not account for sustainability

Question 5

List 5 single development indicators

Answer 5

• Health indicator: Life expectancy at birth
• Education indicator: average number of years of schooling.
• Gini coefficient
• Access to electricity
• Environmental indicators

Question 6

What is the strength of single development indicators

Answer 6

Useful statistical tool for guiding policymaking in a particular area to improve economic development.

Question 7

What is the weakness of single development indicators

Answer 7

Narrow measure of development and does not reflect the multidimensional nature of economic development.

Question 8

Benefits of economic growth for development

Answer 8

• As GDP increases, people can pay for goods and services that improve their material living standards
• Economic growth can increase the income of the poorest in society and remove people from absolute poverty
• GDP increases business activity which can reduce unemployment
• more tax revenue for healthcare and education

Question 9

Costs of growth for development

Answer 9

• negative for environemtn and sustainability with finite resources
• risning incomes and income inequality are correlated