Indicators of Economics Development – Main indicators of economic growth of a nation.
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Indicators of the economics development picture
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Indicators of economic development mean the changes that take place when a country goes on developing. Regarding indicators or measures of economic development, there are different opinions of different economists. As economic development is a dynamic concept, its indicators also vary with the passage of time. Since economic development is a long-term phenomenon, definite criteria set up in one time may not be equally valid in the other time. However, the major indicators of economic development are as follows:
Main Indicators of National Economic Development
1.Real gross national product (Real GNP):
One of the indicators of economic development is an increase in real GNP over a long period of time. According to this criterion, economic development refers to the increase in the production of an economy. It means economic development can be measured in terms of an increase in real national income of an economy over a long period of time. This criterion does not consider a short-period rise in national income, but a sustained increase in real income. Some economists argue that real GNP is a better indicator of economic development so far as economic welfare is considered. This indicator of economic development has failed to take consideration of changes in the growth of population, pollution, distribution of income, etc. in the economy. It does not cover all the production of developing countries which are produced and consumed at home.
2.Per capita income:
Per capita income indicator is widely used as an indicator of making a distinction between developed and developing countries or rich and poor. Per capita income refers to national income divided by the total population. So, it is the average income of each individual in an economy. Economic development takes place if only the rate of increase in real national income is higher than the increase in population Growth rate. It is also not a satisfactory indicator of economic development because the rise in per capita income may not guarantee the improvement in the living standards of people.
3.Basic human needs:
The basic human needs criterion economic development was developed by World Bank, It is a complement to he per capita income criterion According to this criterion, the economic development is evaluated on the basis of the fulfillment of basic needs in terms of wealth, education, water, food, clothing, shelter, work, etc. and non-material needs such as cultural identity and a sense of participation and purpose in life and work. The aim of this criterion is to raise Productivity and control poverty by providing basic human heeds to Poor. This is a very significant criterion of economic development because it has focused attention on the poor. But this criterion should be taken as the complement rather than the substitute of other criteria of economic development
4.Physical quality of life index (PQLI):
This is a non-income indicator of economic development which was developed by Moris D. Marris. It consists of three indicators: infant mortality, life expectancy, and literacy. It is considered as an alternative as well as a good indicator of economic development. While developing this index, the data on three variables, i.e.life expectancy, infant mortality and literacy rate are ranked from one to a hundred. The value 1 refers to a very inferior level and 100 refers to a very superior level. These three indicators get equal weight and average. These three indices give the composite index, which is known as the physical quality of life index (PQLI). This indicator is superior over per capita income, even though it is also not free from defects. It does not include income indicators. Similarly, this involves Subjectively while giving weights to various items as they depend on the various socio-economic and political set up. In addition, it considers only current welfare but not future welfare.
5.Human development index (HDI):
The human Development Index is a recently developed indicator of economic development. It was initiated by UNDP in 1990. This indicator is based on three goals of human development which are as follows:
I.Long and healthy life:
lt is measured by life expectancy at BIRTH.
II.Knowledge:
It is measured by the weighted average of expected years of schooling and means year of schooling For this 2/3 weIght is given to adult literacy and 1/3 weight is given to the met y Schooling.
III. Standard of living:
It is measured by the real GNI per capita income of a country adjusted for purchasing power of currencies of different countries.
Human development index is regarded as the best indicator of economic development because it includes both income and non-income indicators. It attempts to make ranking of different countries on a scale of 0.0 to 1.0 Based on the development
