Development, economic development, gdp gross domestic product, hdi human development index, poverty, inequalities, income per capita, gdp per capita, income, economy, labor, capital, product market, factor market, market value, growth, economic growth, welfare, life expectancy
There are at least four good reasons to measure development:
- For policy making organizations (international organizations, governments, NGOs), we need to verify how the actions are making any progress. The point is to know is something if effective to change things. That requires tracking process.
- We need to regularly evaluate policies and projects.
- Low-quality or biased measures may distort key policy decisions.
- Understanding the data and measures is crucial to be able to see interesting patterns in the data, which eventually contributes to a better understanding of the development process.
[...] Here is a geographic map that gives you a color code depending on HDI across the world. Income per capita correlated with other criteria and here we can see that the lighter colors, meaning the lowest HDI. Advantages and disadvantages Advantages: Considers a richer set of dimensions as compared to GDP per capita Useful to see how economic benefits translate into quality of life Disadvantages: No (direct) role for distribution/inequality considerations Reflects mostly long-term changes (does not respond to short-term changes) A one-dimensional index: aggregation and weighting matter a lot Measurement of Poverty International organizations, governments, and non-governmental organizations (NGOs) have worked to fight poverty. [...]
[...] The easiest way of converting from more to less is to order in terms of some number. They put a minimum and maximum for each dimension and these things are called gold posts, it's essentially based on things which are humanly attainable. In other words, for each of these dimensions we are taking as a maximum something which is already observable in some country. What are the criteria? There is a lot of controversy about what are the right criteria. These were maintained as a standard for some time. [...]
[...] So, the measure of GDP was created to estimate the size of the civil economy with a number. It became a very popular measure once national accountancy was developed. After the second World War, the United Nations began to adopt standards and the GDP became spread and used by a lot of countries very quickly, forgetting the fact that initial purposes are different. It was not designed to measure and compare levels of economic situation between rich and poor countries today. GDP at its origin wasn't an issue. How to measure national income? [...]
[...] For example, a family with income percent below the poverty line is counted the same as a family 50% below. The people under this line are undoubtedly in extreme poverty but it can be fluctuating. And people just above the cutoff might also be extremely poor: the choice of the cutoff is arbitrary. The `typical bundle approach' allows to consider eating habits, preferences, etc. Poverty headcount: the number of people in the population earning below the poverty line. This is a measure of absolute poverty. [...]
[...] This is known as relative poverty. It's a good tool, but in order to calculate the value of the typical food basket, it is important to: - Use the market prices because it must correct for inflation, and more generally for changes in market prices. - And monitor the food basket because it may change over time. But it can be difficult. Besides the fact that the cutoff is artificial, the poverty line does not reflect the degree of poverty. [...]
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