Unit 2 Macro: Growth and Development - Some Indicators

The dictionary definition of ‘development’ is to improve, to progress, or to grow – but development is not just about growth! It is concerned with the improvement of human welfare within an economy, and so it encompasses concepts such as the standard of living, cultural identity and political freedom.

The most common measurement of development is the Human Development Index published each year by the United Nations Development Programme.

Dudley Sears has defined development as “the reduction and elimination of poverty, inequality and unemployment within a growing economy”. Under this definition, development is essentially about improving the incomes of those living in poverty.

The Nobel Economist Amartya Sen, writing in “Development as Freedom”, sees development as being concerned with improving the freedoms and capabilities of the disadvantaged, thereby enhancing the overall quality of life.

Development should be about increasing political freedom, economic freedom, and social freedom and not just about raising incomes.

Other measures of economic and social development:

There are many indicators that one might choose to consider when taking a broad look at the process of economic development, here is a selection:

1. The percentage of adult male and female labour in agriculture, % of arable land that is cultivated

2. Combined primary and secondary school enrolment figures and other indicators of progress in building human capital. 1990 HDR started with this phrase: “People are the real wealth of a nation.”

3. Access to clean water / improved sanitation facilities (% of population with access)

4. Energy consumption per capita

5. Depth of hunger, kilocalories per day per capita

6. Prevalence of HIV, average life expectancy at birth, years of healthy life expectancy, child mortality

7. Access to mobile cellular phones per thousand of the population

8. Percentage of the population living in extreme poverty

9. Dependence on foreign aid / levels of external debt

10. Percentage of households with a bank account

11. Unemployment rates and vulnerable employment rates

12. High-technology exports (% of manufactured exports)

13. The Human Development Index (covered in a later section of this chapter)

14. Progress in achieving the Millennium Development Goals

Michael Todaro specified three objectives of development:

1. To increase the availability and widen the distribution of basic life-sustaining goods such as food, shelter, health and protection.

2. To raise levels of living, including, in addition to higher incomes, the provision of more jobs, better education, and greater attention to cultural and human values, all of which will serve not only to enhance material well-being but also to generate greater individual and national self-esteem

3. To expand the range of economic and social choices available to individuals and nations by freeing them from servitude and dependence not only in relation to other people and nation-states but also to the forces of ignorance and human misery.

Note the emphasis on ‘cultural and human values’, ‘self-esteem’ and freedom from ignorance; it is important to remember that economic development is about much more than simply achieving economic growth.