Transcript Measuring Development - Economics IBHL1 | Robert Winters

Measuring Development
Argument:
Over time, capitalist economic systems
inevitably develop increasing inequality
within a population because factors of
production such as capital, land, and
entrepreneurship become concentrated in
the hands of the wealthy.
Does GDP per capita give a reasonable
estimate of the welfare of a nation’s
population?
Measuring inequality:
The Lorenz Curve
The further the Lorenz Curve is from midpoint
line, the more inequality that exists
http://content.answers.com/main/content/img/oxford/Oxford_Geography/0198606737.lorenz-curve.1.jpg
Gini Index
• Higher Gini Index # = Higher Inequality
Gini Coefficient
Gini Coefficient = A/(A + B)
• Range 0-1
If A is small because there
is little inequality in the
country, the coefficient will
be close to zero.
Real World Approximate Range
0.25 (Denmark) to 0.70 (Namibia)
Gini Index
Gini Index =Gini Coefficient [A/(A + B)] x 100
• Range 0-100
Namibia 70.7
South Africa 65
Philippines 45.8
United States 45
Japan 38.1
India 36.8
South Korea 31.3
Sweden 25
Choose two countries below, draw a Lorenz Curve for each on the same graph
to compare inequality among their citizens, and use it to explain (in a brief
paragraph) whether income inequality tends to be a bigger issue among
MEDCs or LEDCs.
•
21Swaziland50.4
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
1Namibia70.7
2South Africa65.0
3Lesotho63.2
4Botswana63.0
5Sierra Leone62.9
6Central African Republic61.3
7Haiti59.2
8Colombia58.5
9Bolivia58.2
10Brazil56.7
11Guatemala55.1
12Honduras53.8
13Hong Kong53.3
14Paraguay53.2
15El Salvador52.4
16Chile52.4
17Panama51.0
18Papua New Guinea50.9
19Zambia50.8
20Niger50.5
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
22Gambia, The50.2
23Zimbabwe50.1
24Dominican Republic49.9
25Peru49.6
26Sri Lanka49.0
27Mexico48.2
28Costa Rica48.0
29Singapore47.8
30Madagascar47.5
31Mozambique47.3
32Nepal47.2
33Uruguay47.1
34Ecuador46.9
35Rwanda46.8
36Philippines45.8
37Uganda45.7
38Jamaica45.5
39United States45.0
40Cameroon44.6
Does foreign direct investment by
multinational corporations (MNCs) improve
the welfare of the citizens of developing
countries or does it lead to increased
inequality among citizens?
Does investment by MNCs appears to be
benefitting the typical citizen in each
country?
Developing Countries
• Brazil 56.7
• China 41.5
• Mexico 48.2
• Thailand 43
• Malaysia 44.1
• India 36.8
How should we define development given
the fact that our definition will guide
economic policy?
Economic Growth vs Development
Economic Development
Growth
Development: Where increases in
real GDP per capita are accompanied
by increases in standards of living
Increases in welfare
Increases in human freedom
If we don’t know what development
is, how do we measure it?
2000 UN Millenium Development Goals
HDI
Human Development Index
Composite Index:
• Health Life Span
• EducationLiteracy + School enrolment
• GDP/capita
Anomalies
• Saudi Arabia- 44th GDP/capita, 77th HDI
South Africa
• 52nd GDP/capita, 120th HDI
Ecuador
• 112th GDP/capita, 82nd HDI
Sweden
• 20th GDP/capita, 6th HDI
Zimbabwe
• 125th GDP/capita, 145th HDI
Gender Measurements
UN Millenium Goals
Goal 3: Promote gender equality and empower women
Target 4: Eliminate gender disparity in primary and
secondary education, preferably by 2005, and in all
levels of education not later than 2015
Ways of Measuring:
-Ratio of girls to boys in primary, secondary and tertiary
education
-Ratio of literate women to men, 15–24 years old
-Share of women in wage employment in the nonagricultural sector
-Proportion of seats held by women in national parliament
Gender Measurements
Gender-related Development Index (GDI)
• GDI = HDI adjusted for inequality between
men and women
– If GDI is lower than HDI, more inequality
Gender Empowerment measure (GEM)
• % of women in leadership, management,
and parliament positions
• Share of national income
HPI
Human Poverty Index
Proportion of people not meeting a basic
level of each of the HDI goals:
% who do not reach age 40
% of adults who are illiterate
% of pop without access to safe water + %
of kids who are underweight
• Human Poverty Index Map
GPI
Genuine Progress Indicator
Website explaining GPI
Review
1. What is development?
2. How is development measured?