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Home / IB / Economics / SL / Revision Notes / 4. The Global Economy / 4.8 Measuring Economic Development / 4.8.1 Single Indicators of Development


4.8.1 Single Indicators of Development


The Multidimensional Nature of Economic Development

  • The 17 Sustainable Development Goals demonstrate the complexity of the nature of economic development
  • The different elements can be separated into three categories: economic, social and environmental
  • Sustainable economic development occurs at the intersection of all three and is represented in the diagram below

4-8-1-single-indicators-of-development

Sustainable economic development is a multi-dimensional concept incorporating economic growth, environmental care and social progress
 

  • Viable refers to the fact that the combination of economic and environmental progress is happening with some care, however it is not sustainable in the long term
  • Bearable refers to the fact that the interaction of society and the environment is happening with some thought, however it is still not sustainable in the long term
  • Equitable refers to the fact that the interaction of the economy and society is happening with some attention to well-being, however it is still not sustainable in the long term
     
  • Due to this complexity, elements of economic development can be measured using single or composite indicators

Single Indicators of Economic Development

  • A single indicator is one factor, such as GDP per person (capita), used to measure the development of a country
  • Single indicators measures only one development characteristic within a country
     

1, GDP/GNI per person (per capita) at PPP

  • Real GDP is the value of all goods/services produced in an economy in a one-year period - and adjusted for inflation
    • For example, if nominal GDP is £100bn and inflation is 10% then real GDP is £90bn
       
  • GDP per capita = GDP / the population
    • It shows the mean wealth of each citizen in a country
    • This makes it easier to compare standards of living between countries: 
      • For example, Switzerland has a much higher GDP/capita than Burundi
         
  • Gross national income (GNI) measures the income earned by citizens operating outside of the country + the GDP
    • Many citizens employ their resources outside of a country's borders - and then send the income home
       
  • Purchasing power parity (PPP) is a conversion factor that can be applied to GDP, GNI and GNP
    • PPP calculates the relative purchasing power of different currencies
    • It shows the number of units of a country's currency that are required to buy a product in the local economy, as $1 would buy of the same product in the USA
    • The aim of PPP is to help make a more accurate standard of living comparison between countries where goods/services cost different amounts
       
  • Using real GDP/Capita provides better information than real GDP as it takes population differences into account
  • Using real GNI/capita is a more realistic metric for analysing the income available per person than GDP/capita
  • Using GDP/GNI per person (per capita) at PPP allows for comparisons between countries which take into account the substantial differences in the cost of living
     

2. Health and education indicators

  • Multiple single indicators for health and education can provide useful data for comparisons between countries
  • Typical single health indicators include:
    • Infant mortality rate
    • Life expectancy
    • Number of doctors per 1,000 of the population
    • Diabetes incidence
  • Typical single education indicators include:
    • Youth literacy rate
    • Adult literacy rate
    • Mean years in school
    • Ratio girls/boys in school
    • Math achievement 8th grade
       

3.  Economic/social inequality indicators

  • Typical single economic and societal indicators include:
    • The Gini Coefficient
    • Murders per 1000 of the population
    • Percentage of women in national parliaments
       

4. Energy indicators

  • Typical single energy indicators include:
    • Coal consumption per person
    • Electricity generation per person
    • Residential electricity usage
    • Oil consumption per person
       

5. Environmental indicators

  • Typical single environmental indicators include:
    • CO2 emissions per person
    • Total CO2 emissions
    • Agricultural water withdrawal
    • Primary forest area


  • 1. Introduction To Economics
    • 1.1 What Is Economics?
      • 1.1.1 Economics as a Social Science
        • 1.1.2 The Problem of Choice
          • 1.1.3 The Production Possibilities Curve Model (PPC)
            • 1.1.4 Modelling the Economy
            • 1.2 How Do Economists Approach The World?
              • 1.2.1 Economic Methodology
                • 1.2.2 Economic Thought
              • 2. Microeconomics
                • 2.1 Demand
                  • 2.1.1 Demand, Price & Quantity
                    • 2.1.2 Non-Price Determinants of Demand
                    • 2.2 Supply
                      • 2.2.1 Supply, Price & Quantity
                        • 2.2.2 Non-Price Determinants of Supply
                        • 2.3 Competitive Market Equilibrium
                          • 2.3.1 Market Equilibrium & Disequilibrium
                            • 2.3.2 Functions of the Price Mechanism
                              • 2.3.3 Consumer & Producer Surplus
                              • 2.4 Price Elasticity of Demand (PED)
                                • 2.4.1 Definition, Calculation & Determinants of PED
                                  • 2.4.2 The Significance of PED
                                  • 2.5 Income Elasticity of Demand (YED)
                                    • 2.5.1 Definition, Calculation & Illustration of YED
                                    • 2.6 Price Elasticity of Supply (PES)
                                      • 2.6.1 Definition, Calculation & Determinants of PES
                                      • 2.7 Role of Government In Microeconomics
                                        • 2.7.1 Reasons For Government Intervention In Markets
                                          • 2.7.2 Government Intervention: Indirect Taxes & Subsidies
                                            • 2.7.3 Government Intervention: Price Controls, Direct Provision & Regulation
                                            • 2.8 Market Failure: Externalities & Common Pool (Access) Resources
                                              • 2.8.1 Market Failure
                                                • 2.8.2 Negative Externalities
                                                  • 2.8.3 Positive Externalities
                                                    • 2.8.4 Common Pool (Access) Resources
                                                      • 2.8.5 Government Intervention to Address the Market Failure
                                                        • 2.8.6 Other Interventions to Address the Market Failure
                                                        • 2.9 Market Failure: Public Goods
                                                          • 2.9.1 Public Goods
                                                        • 3. Macroeconomics
                                                          • 3.1 Measuring Economic Activity
                                                            • 3.1.1 National Income & The Circular Flow of Income
                                                              • 3.1.2 National Income Terminology & Calculations
                                                                • 3.1.3 The Business Cycle
                                                                  • 3.1.4 Appropriateness of Using GDP/GNI to Measure Well-being
                                                                    • 3.1.5 Alternative Measures of Well-Being
                                                                    • 3.2 Variations in Economic Activity (AD & AS)
                                                                      • 3.2.1 Aggregate Demand (AD)
                                                                        • 3.2.2 Short-Run Aggregate Supply (SRAS)
                                                                          • 3.2.3 Alternative Views of Aggregate Supply (AS)
                                                                            • 3.2.4 Shifts of the Long-Run Aggregate Supply (LRAS)
                                                                              • 3.2.5 Macroeconomic Equilibrium
                                                                              • 3.3 Macroeconomic Objectives
                                                                                • 3.3.1 An Introduction to Macroeconomic Objectives
                                                                                  • 3.3.2 Economic Growth
                                                                                    • 3.3.3 Low Unemployment
                                                                                      • 3.3.4 Low & Stable Rate of Inflation
                                                                                        • 3.3.5 Potential Conflicts Between Macroeconomic Objectives
                                                                                        • 3.4 Inequality & Poverty
                                                                                          • 3.4.1 Measuring Inequality & Poverty
                                                                                            • 3.4.2 Causes of Inequality & Poverty
                                                                                              • 3.4.3 Using Taxation to Reduce Inequality & Poverty
                                                                                                • 3.4.4 Other Policies to Reduce Inequality & Poverty
                                                                                                • 3.5 Demand Management: Monetary Policy
                                                                                                  • 3.5.1 An Overview of Monetary Policy
                                                                                                  • 3.6 Demand Management: Fiscal Policy
                                                                                                    • 3.6.1 An Overview of Fiscal Policy
                                                                                                    • 3.7 Supply-Side Policies
                                                                                                      • 3.7.1 An Overview of Supply-Side Policies
                                                                                                        • 3.7.2 The Effectiveness of Supply-Side Policies
                                                                                                      • 4. The Global Economy
                                                                                                        • 4.1 Benefits of International Trade
                                                                                                          • 4.1.1 The Advantages of Free Trade
                                                                                                          • 4.2 Types of Trade Protection
                                                                                                            • 4.2.1 Tariffs
                                                                                                              • 4.2.2 Quotas
                                                                                                                • 4.2.3 Export Subsidies
                                                                                                                  • 4.2.4 Administrative Barriers
                                                                                                                  • 4.3 Arguments For & Against Trade Protection
                                                                                                                    • 4.3.1 Arguments For & Against Trade Protection
                                                                                                                    • 4.4 Economic Integration
                                                                                                                      • 4.4.1 Understanding Economic Integration
                                                                                                                        • 4.4.2 Types of Trading Blocs
                                                                                                                          • 4.4.3 The World Trade Organisation (WTO)
                                                                                                                          • 4.5 Exchange Rates
                                                                                                                            • 4.5.1 Types of Exchange Rate Systems
                                                                                                                              • 4.5.2 Causes & Consequences of Exchange Rate Fluctuations
                                                                                                                              • 4.6 Balance of Payments
                                                                                                                                • 4.6.1 Components of the Balance of Payments
                                                                                                                                • 4.7 Sustainable Development
                                                                                                                                  • 4.7.1 The Sustainable Development Goals
                                                                                                                                  • 4.8 Measuring Economic Development
                                                                                                                                    • 4.8.1 Single Indicators of Development
                                                                                                                                      • 4.8.2 Composite Indicators of Development
                                                                                                                                        • 4.8.3 Evaluating the Different Approaches
                                                                                                                                        • 4.9 Barriers to Economic Growth & Development
                                                                                                                                          • 4.9.1 Poverty Traps
                                                                                                                                            • 4.9.2 Economic, Political & Social Barriers
                                                                                                                                            • 4.10 Economic Growth & Development Strategies
                                                                                                                                              • 4.10.1 Trade Strategies, Diversification & Social Enterprise
                                                                                                                                                • 4.10.2 Market-Based & Interventionist Policies
                                                                                                                                                  • 4.10.3 Merit Goods & Inward Foreign Direct Investment
                                                                                                                                                    • 4.10.4 Foreign Aid & Development Assistance
                                                                                                                                                      • 4.10.5 Institutional Change
                                                                                                                                                        • 4.10.6 Evaluating Market Orientated Approaches Versus Government Intervention
                                                                                                                                                          • 4.10.7 Progress Towards Sustainable Development Goals

                                                                                                                                                        Author: Steve



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