MACRO 8
Development Economics
Development
Development is about people development over time
In 2018, nearly 9% of the world’s population was still living on an income below $1.90 per
day
The average income per capita in a high income country is $43,000 vs $785 in a low income
country
Development improves the freedoms and capabilities of the disadvantaged and enhances
the overall quality of life
Human development provides an opportunity to people to free themselves from suffering
caused by
o Early/ premature mortality
o Persecution and intolerance
o Starvation/ malnutrition
o Illiteracy
Development is about the ability to shape out own lives requiring information, literacy,
participation and capabilities
There are three objectives of development
o Life sustaining goods and services such as food, shelter, health and protection
services
o Higher incomes via the provision of more jobs, better education, greater attention to
cultural and human values to raise standards of living
o Freedom to make economic and social choices
Economic growth is
o A sustained rise in a country’s productive capacity
o An increase in the real value of GDP/ GNI per capita
o Increased productivity of factors of production
Economic development is
o Progress in expanding economic freedoms
o Sustained improvement in economic and social opportunities
o Growth in personal and national capabilities
HDI
The HDI focuses on longevity, basic education and minimal income
It’s a broad composite measure of improvements in people’s lives
It’s a weighted index
Each of the 3 measures is given a value between 0 and 1
o 0 is very low development
o 1 is very high development
An average is taken of the 3 composite indicators to give an overall measure of development
It can be expressed as a number 0 and 100, or 0 and 1
Knowledge
o Mean year of schooling and expected years of schooling
Long and healthy life
o A life expectancy component is calculated using a minimum value for life expectancy
of 25 ears and maximum of 85 years
Decent standard of living
, o GNI is adjusted to purchasing power parity standard
Disadvantages
o HDI doesn’t take account qualitative factors such as cultural identity and political
freedoms
o GNI per capita takes no account of income distribution
o GNI per capita will be an inaccurate measure of people’s well-being if income is
unevenly distributed
o PPP values can change quickly and be inaccurate
o High GNI can result in more spending on aspects that could reduce living standards
Advantages
o Relatively easy data to collect and compare
o It is objective
o Measures such as longevity and education levels are indicative of other development
factors
Gender equality denotes women having the same opportunities as men including the ability
to participate in the public sphere
Gender equity denotes the equivalence in life outcomes for women and men recognising
different needs and interests
Indicators of development
Changing structure of national output, trade and employment
% of adult male and female labour in agriculture
% of arable land that is cultivated
Access to clean water
Energy consumption per capita
Fertility rates
Prevalence of HIV
Child mortality
Life expectancy
Access to mobile cellular phones
Dependence of a country of foreign aid
High technology exports
Degree of primary export dependence
Progress in achieving sustainable development goals
Sustainable development goals
End poverty
End hunger
Ensure healthy lives
Ensure inclusive and equitable quality education and promote life long learning
opportunities
Achieve gender equality and empower all women and girls
Ensure availability and sustainable management of water and sanitation
Ensure access to affordable energy for all
Promote sustained and sustainable growth
Build resilient infrastructure
Reduce inequality for all
Make cities inclusive, safe, resilient and sustainable
Ensure sustainable consumption and production patterns
Take urgent action to combat climate change
Conserve and sustainably use oceans, seas, marine resources for sustainable development
Development Economics
Development
Development is about people development over time
In 2018, nearly 9% of the world’s population was still living on an income below $1.90 per
day
The average income per capita in a high income country is $43,000 vs $785 in a low income
country
Development improves the freedoms and capabilities of the disadvantaged and enhances
the overall quality of life
Human development provides an opportunity to people to free themselves from suffering
caused by
o Early/ premature mortality
o Persecution and intolerance
o Starvation/ malnutrition
o Illiteracy
Development is about the ability to shape out own lives requiring information, literacy,
participation and capabilities
There are three objectives of development
o Life sustaining goods and services such as food, shelter, health and protection
services
o Higher incomes via the provision of more jobs, better education, greater attention to
cultural and human values to raise standards of living
o Freedom to make economic and social choices
Economic growth is
o A sustained rise in a country’s productive capacity
o An increase in the real value of GDP/ GNI per capita
o Increased productivity of factors of production
Economic development is
o Progress in expanding economic freedoms
o Sustained improvement in economic and social opportunities
o Growth in personal and national capabilities
HDI
The HDI focuses on longevity, basic education and minimal income
It’s a broad composite measure of improvements in people’s lives
It’s a weighted index
Each of the 3 measures is given a value between 0 and 1
o 0 is very low development
o 1 is very high development
An average is taken of the 3 composite indicators to give an overall measure of development
It can be expressed as a number 0 and 100, or 0 and 1
Knowledge
o Mean year of schooling and expected years of schooling
Long and healthy life
o A life expectancy component is calculated using a minimum value for life expectancy
of 25 ears and maximum of 85 years
Decent standard of living
, o GNI is adjusted to purchasing power parity standard
Disadvantages
o HDI doesn’t take account qualitative factors such as cultural identity and political
freedoms
o GNI per capita takes no account of income distribution
o GNI per capita will be an inaccurate measure of people’s well-being if income is
unevenly distributed
o PPP values can change quickly and be inaccurate
o High GNI can result in more spending on aspects that could reduce living standards
Advantages
o Relatively easy data to collect and compare
o It is objective
o Measures such as longevity and education levels are indicative of other development
factors
Gender equality denotes women having the same opportunities as men including the ability
to participate in the public sphere
Gender equity denotes the equivalence in life outcomes for women and men recognising
different needs and interests
Indicators of development
Changing structure of national output, trade and employment
% of adult male and female labour in agriculture
% of arable land that is cultivated
Access to clean water
Energy consumption per capita
Fertility rates
Prevalence of HIV
Child mortality
Life expectancy
Access to mobile cellular phones
Dependence of a country of foreign aid
High technology exports
Degree of primary export dependence
Progress in achieving sustainable development goals
Sustainable development goals
End poverty
End hunger
Ensure healthy lives
Ensure inclusive and equitable quality education and promote life long learning
opportunities
Achieve gender equality and empower all women and girls
Ensure availability and sustainable management of water and sanitation
Ensure access to affordable energy for all
Promote sustained and sustainable growth
Build resilient infrastructure
Reduce inequality for all
Make cities inclusive, safe, resilient and sustainable
Ensure sustainable consumption and production patterns
Take urgent action to combat climate change
Conserve and sustainably use oceans, seas, marine resources for sustainable development
