INDICATORS OF DEVELOPMENT

SIS MICHELLE MATHIAS

Unit-1: 1.3

Development is a process that is often haphazard. In most cases all across the world, not everyone gets the same opportunities. There are huge development gaps among Human beings due to income disparities, lack of equal opportunities to access of facilities from the fields of education, employment, health, technology, etc. The poor are not just deprived of many facilities, their access to natural resources is also less. There is also a vast gender discrimination in many countries. All of this contributes to a slow rate of development.

Indicators of Development basically are like pointers that specify various dimensions which can be measured in order to analyse the course of Development that has occurred in any given nation. These indicators once measured and analysed are highly beneficial to policy makers as they provide data that can be used to make policies which can cater to a better development of the people. Furthermore, “they can help incorporate physical and social science knowledge into decision-making, and they can help measure and calibrate progress toward sustainable development goals.” (United Nations, 2007) [1]

For instance, Development indicators in particular areas like health, education, death rate, welfare services, etc can be highly beneficial to policy makers. These indicators numerically determine the development growth rate in various fields of a country.

“Paul & Garrett (2014) identified two indicators of development which include traditional and individual. Traditional Indicators of Development include the Gross National Product (GNP) and Gross Domestic Product (GDP), while Individual Indicators of Development include literacy; life expectancy; infant mortality; school enrolment; percentage of the population with access to an improved water supply; percentage of the population living in urban areas; food intake (calories per capital per day); energy consumption per capital; doctors per 1,00,000 people; internet penetration rate; and number of motor vehicles per 1000 members of the population.” (Salami et.al., 2017) [2]

HUMAN DEVELOPMENT INDEX

Development indicators of a country that address human beings indicate in a numerical measure unequal access to health, education and employment measures. They do not take into count the economic prosperity alone but other factors that determine the human quality of life. These are called the ‘Human Development Index’ (HDI).

The Human Development Index as it is termed, highlights the ability of humans to lead healthy lives, life expectancy ratios at birth, the ability to acquire education, standard of living based on gross national income per capita. disparities in income, gender inequality, unequal distribution of natural resources and wealth.

The Economic Times (2020) defines HDI as “a statistical tool used to measure a country's overall achievement in its social and economic dimensions. The social and economic dimensions of a country are based on the health of people, their level of education attainment and their standard of living”.[3]

Max Roser says that “the Human Development Index (HDI) is an index that measures key dimensions of human development.” [4] Initially, there were three indices or key dimensions that were introduced for the HDI. These were-

Long and healthy life – measured by life expectancy.
Access to education – measured by expected years of schooling of children at school-entry age and mean years of schooling of the adult population.
And a decent standard of living – measured by Gross National Income per capita adjusted for the price level of the country.”[5]

In addition to these the United Nations Development Programme (UNDP, 2018) issued three supplementary indices by 2010 to identify the groups of people who were lagging in progress and a fourth one in 2014. These indices were important and could contribute immensely in understanding development. These indices were:

Multidimensional Poverty Index (MPI),
Inequality-adjusted Human Development Index (IHDI) and
Gender Inequality Index (GII)
Gender Development Index (GDI) (in 2014)[6]

Furthermore, by 2017, the UNDP included more values and other indices that could aid policy-makers, Researcher and analysts in a comprehensive understanding of Human Development. These include-

Quality Of Human Development,
Life-Course Gender Gaps
Women’s Empowerment
Environmental Sustainability
Socio-Economic Sustainability

The below picture is a representation of the HUMAN DEVELOPMENT INDEX and how it is multi-dimensional.

In order to have a better understanding of the concepts, we shall now take a look at each of them individually.

Life expectancy

Life Expectancy is an important element to analyse Development. Medical Health and the control over diseases and a cleaner, healthier lifestyle are contributors to a better life amongst human beings. Paul & Garrett say that ‘the incidence of diseases (such as malaria), physical environmental conditions (such as very low rainfall), human environmental conditions (such as pollution), and personal life style (such as smoking) influence the life expectancy.[7]

In the very early years and even towards the 18^th century, the life span of individuals was really short. The Infant mortality rates were also high. The average life span only happened to be around 30 years. Towards the beginning of the 19^th century, the average life span gradually grew to be around 40 years. However, in the later years, with the developing of scientific knowledge, industrialisation and a growth in knowledge about medical science and medical health, the life span gradually grew. However, it was noted that the life span was higher in the industrialised nations of the world where there was wealth, better possibilities and increasing amenities. Those countries with extreme poverty had higher mortality rates and a shorter life span. This gradually changed as countries around the world began experiencing growth and development. And the Life Expectancy has increased globally today.

Measuring Life Expectancy

Max Roser, Esteban Ortiz-Ospina and Hannah Ritchie state that “Life expectancy is the key metric for assessing population health. Broader than the narrow metric of the infant and child mortality, which focus solely at mortality at a young age, life expectancy captures the mortality along the entire life course. It tells us the average age of death in a population”.[8]

Life expectancy at birth is the “Number of years a new-born infant could expect to live if prevailing patterns of age-specific mortality rates at the time of birth remain the same throughout the infant's life”.[9]

“In most developing countries such as India and many other Southeast Asian countries, the number of infant deaths is responsible for lowering the overall life expectancy”[10] writes Dr Ananya Mandal (Mandal, 2019).

Access to Education

Access to Education measures the Literacy in a given country. It points out to the educational programmes that are carried out in any given country at primary education levels and the other varied literacy programmes meant for adults. Literacy rate statistics is also measured in the context of the ration of Male Literacy Rate to the Female Literacy Rate.

UNESCO Institute for Statistics defines Literacy rate as total number of literate persons in a given age group, expressed as a percentage of the total population in that age group. The adult literacy rate measures literacy among persons aged 15 years and above, and the youth literacy rate measures literacy among persons aged 15 to 24 years.[11]

Education is an important factor that defines the quality of life. As Education and qualification has helped many individuals to get better jobs and adapt to better lifestyles and an increased pay scale. “Studies have also shown that people who are literate are able to access medical and other information that will help them to attain a higher quality of life compared with those who are illiterate”[12]. While, one cannot deny that there are many jobless despite their education, Education however, is a necessity for being an informed person.

UNESCO also mentions limitations in this field as it says that “it has been observed that some countries apply definitions and criteria for literacy which are different from the international standards defined above, or equate persons with no schooling to illiterates, or change definitions between censuses. Practices for identifying literates and illiterates during actual census enumeration may also vary. In addition, errors in literacy self-declaration can affect the reliability of literacy statistics”.[13]

On a personal note: Education is important, this however, does not mean, that someone with no education facilities is not successful. In many cases, years of expertise in a particular field with little or no education has led to a better lifestyle too because of honed skills and expertise in other fields like farming, small entrepreneurs, etc.

GNI (PPP)

While discussing about GNI (PPP) it is important that we analyse, not just GNI, but GNP and GDP for a better and clear understanding of these terms. The Human Development Index includes Gross National Income (GNI), Gross National Product (GNP), and Gross Domestic Product (GDP). These are indicators that enable the measurement of “a country’s ability to produce and earn” (Amadeo, 2020). We take a look at the definitions of the same.

Purchasing power parity (PPP)

Purchasing power parity (PPP) measures how much a currency can buy in terms of an international benchmark (usually dollars), since the cost of goods and services differs between countries.[14] (GRID Arendal, 2020)

Purchasing Power Parity (PPP) is a method of measuring the relative purchasing power of different countries currencies over the same types of goods and services, despite differential rates of inflation. PPP allows to make more accurate comparisons of standards of living across countries, because goods and services may cost more in one country than in another.[15]

Gross National Income (GNI)

Kimberly Amadeo in her article on the website ‘The Balance’ defines “Gross National Income (GNI) as a measurement of a country's income.” She adds, “It includes all income earned by a country's residents, businesses, and earnings from foreign sources. Income is defined as all employee compensation plus investment profits. GNI also includes any product taxes not already counted, minus subsidies. It only counts income earned from residents who work abroad and does not count income earned by foreigners located in the country. Like GDP, it also does not include the shadow or black economy.”[16] (Amadeo, 2020)

Peter Bondarenko in his article, ‘Gross national income’ (GNI) in Britannica states that GNI is “the sum of a country’s gross domestic product (GDP) plus net income (positive or negative) from abroad. It represents the value produced by a country’s economy in a given year, regardless of whether the source of the value created is domestic production or receipts from overseas.” (Encyclopaedia Britannica) [17] On the other hand, the Gross domestic product is the value of goods and services produced within a country [18] (Bureau of Economic Analysis, U.S.A)

The website ‘Investopedia’ states that GNI calculates the total income earned by a nation's people and businesses, including investment income, regardless of where it was earned. It also covers money received from abroad such as foreign investment and economic development aid.[19]

Organisation for Economic Co-operation and Development states that the Gross national income (GNI) is the gross domestic product, plus net receipts from abroad of compensation of employees, property income and net taxes less subsidies on production. Compensation of employees receivable from abroad are those that are earned by residents who essentially live inside the economic territory but work abroad (this happens in border areas on a regular basis), or for people who live and work abroad for short periods (seasonal workers) and whose centre of economic interest remains in their home country. Property income receivable from/payable to abroad includes interest, dividends, and all (or part of) retained earnings of foreign enterprises owned fully (or in part) by resident enterprises (and vice versa).[20] (OECD, 2020)

Gross National Product (GNP)

GNP measures the monetary value of all the finished goods and services produced by the country’s factors of production irrespective of their location. Only the finished or final goods are considered as factoring intermediate goods used for manufacturing would amount to double counting. It includes taxes but does not include subsidies.[21] (Economic Times)

Jim Chappelow on the website Investopedia states that Gross national product (GNP) is an estimate of total value of all the final products and services turned out in a given period by the means of production owned by a country's residents. GNP is commonly calculated by taking the sum of personal consumption expenditures, private domestic investment, government expenditure, net exports and any income earned by residents from overseas investments, minus income earned within the domestic economy by foreign residents. Net exports represent the difference between what a country exports minus any imports of goods and services. (Chappelow, 2020) [22]

Paul & Garrett define Gross National Product (GNP) as “the total value of goods and services produced by a country in a year, plus income earned by the country’s residents from foreign investment, minus the income earned within the domestic economy by overseas residents (quoted in Salami et al, 2020)[23].

Gross Domestic Product (GDP)

GDP is the main indicator to analyse the financial status of a country. It helps one determine the economic condition. As GDP means the aggregate market value of goods and services produced by a country’s economy during a specified period of time (usually calculated in the quarter of a year). It is calculated based on the sum of all Earning of the citizens of a country, their investments including purchases and expenses, the exports (deducting the imports) and Government spending.

The ‘World Development Report’ (2001) gives a technical definition of GDP as “the gross value added, at purchaser prices, by all resident (nationals and foreigners) producers in the economy plus any taxes and minus any subsidies not included in the value of the products’. [24]

“GDP can be calculated in three ways, using expenditures, production, or incomes. It can be adjusted for inflation and population to provide deeper insights.”[25]

“In economics, the final users of goods and services are divided into three main groups: households, businesses, and the government. One of the ways GDP is calculated is by adding the expenditures made by the three groups. GDP = Consumption + Investment + Government Spending + Net Exports or more succinctly as GDP = C + I + G + NX, where consumption ‘C’ indicates private-consumption expenditures by households and non-profit organizations, Investment (I) refers to business expenditures by businesses and home purchases by households, ‘G’ denotes government spending, i.e., expenditures on goods and services by the government, and Net Exports (NX) represents a nation’s exports minus its imports.” (Encyclopaedia Britannica)[26]

In India, the Central Statistical Office, or CSO is responsible for measuring the GDP by coordinating with several federal and state-run agencies. It gathers data from the respective offices and calculates GDP. The Financial Express states that for the calculation of GDP at factor cost, data is taken from eight sectors, namely agriculture; mining and quarrying; manufacturing; forestry and fishing; electricity and gas supply; construction, trade, hotel, transport and communication; financing, real estate and insurance; and business services and community, social and public services. For the calculation of expenditure-based GDP, all the spending incurred on final goods and services are added that include consumer spending, government spending, business investment spending, and net exports.[27]

GDP is usually compared with the GDP of previous years. GDP affects the Stock Markets. A low GDP is a sign of an unhealthy and poor economy. As a low GDP indicates lower purchase parities leading to lower profits which leads to a lowering of stock prices of companies and gradually a negative GDP.

Difference Between GNI and GDP

(Diagram chart adapted from Amadeo, 2020)

‘C’ indicates private-consumption expenditures by households and non-profit organizations
‘I’ Investment refers to business expenditures by businesses and home purchases by households
‘G’ represents government spending- expenditures on goods and services by the government
'X' represents Net Exports- a nation’s exports minus its imports.

Gross national product includes the earnings from all assets owned by residents. It even includes earnings that don't flow back into the country. It then omits the earnings of all foreigners living in the country, even if they spend it within the country. GNP only reports how much is earned by the country's citizens and businesses, no matter where it is spent in the world. (Amadeo, 2020)

The difference between GNI and GDP is that “GNI includes GDP plus wages, salaries, and property income of the country's residents earned abroad and at home. It also comprises of the net taxes and subsidies receivable from abroad”. (OECD, 2020) GNP is related to another important economic measure called gross domestic product (GDP), which takes into account all output produced within a country's borders regardless of who owns the means of production. GNP starts with GDP, adds residents' investment income from overseas investments, and subtracts foreign residents' investment income earned within a country.[28] (Chappelow, 2020)

Simply put, “the GNP is nearly identical to gross domestic product (GDP) except that the latter does not include the income accruing to a nation’s residents from investments abroad (minus the income earned in the domestic economy accruing to nonnationals from abroad)” (Encyclopedia Britannica)[29].

Non-income Human Development Index

Value of the HDI computed from the life expectancy and education indicators only.”[30]

Multidimensional Poverty Index (MPI)

Poverty is not just about not having wealth. Poverty today is Multi-dimensional. Lack of Resources, Lack of Food and Nutrition, High Mortality Rates due to Lack of Health Facilities, Lack of Education, Lack of Sanitation, Lack of Technology Benefits…including electricity, Lack of Housing and other Assets are all perspectives of being poor in today’s context.

A sudden epidemic or pandemic, a sudden flood or tsunami or in case of farmers, a sudden pest attack can overnight turn fortunes and push people above the poverty mark plunging into the poverty zone. For instance, in India, the lockdown due to Corona Virus Pandemic in 2020 has led to major poverty hassles with many losing jobs and the migrants and daily wage earners starving. The same can be seen in the case of massive flooding in Bihar and Assam and locust attack in many parts of North India. All of this in one year and in the same time frame has led to problems associated with poverty. Poverty is therefore also associated with Sustainable Development Goals. So, while India’s Poverty Index had been reducing, the data on multi-dimensional poverty can only be assessed after all these incidents have passed.

“The global MPI examines each person’s deprivations across 10 indicators in three equally weighted dimensions—Health, Education and Standard of living (figure 1) and offers a high-resolution lens to identify both who is poor and how they are poor. It complements the international $1.90 a day poverty rate by showing the nature and extent of overlapping deprivations for each person.”[31] (UNDO and OPHDI, 2020)

Inequality-adjusted Human Development Index (IHDI)

The difference between the HDI and the IHDI is that while HDI denotes the national average of the three dimensions of Life expectancy, Access to Education and GNI PPP, the IHDI counts those average by discounting each dimension’s average value according to its level of inequality.

HDI values need not reveal the human disparities across the population, but that is not the case with IHDI. In simple words, if there is ‘Equality’ then HDI and IHDI values will be same. But if there is Inequality then IHDI values will be lesser than HDI values. Gast ́on Yalonetzky, (2011) says that since the IHDI is never higher than the HDI, the former is interpreted as “actual human development”, penalized by inequality, while the latter means “potential human development” (should inequality be completely suppressed). [32]

The IHDI values are beneficial as they give the scores that can aid Government Policies to trace the inequality which hinders the Development process and aim at achieving better development scores through Policy changes and aid given to the have-not to raise their standard of living.

Indexes for Gender Inequality

Over the period of years, female discrimination has gradually reduced. Girls and Women today, are achieving success in various fields where they were initially not permitted or were considered as male domains. However, there continues to be a discrimination even today with matters related to health, hygiene, education, nutrition, political representation, wages, etc in many parts of the world.

Gender Inequality is an important element of Development. A lack of equality amidst the Complimentary sexes is a hindrance to development. Often the women have to face “negative consequences for development of their capabilities and their freedom of choice” (UNDP). [33] There are two indices to measure the Male and Female disparities. These are:

Gender Development Index (GDI) and
Gender Inequality Index (GII)

Gender Development Index (GDI)

The GDI uses the same key dimensions of the human development index, namely, Life expectancy, Access to Education and GNI per capita to measure the gender gaps between men and women. The three dimensions are measured separately for men and women and then compared. These measurements clearly point out the disparities or achievements which can aid policies related to gender equality further enhancing a healthy development across the world.

The UNDP website points out that on the calculation of the GDI from over 166 countries, it was found that “women are lagging behind their male counterparts and need to catch up within each dimension of human development [34].

Gender Inequality Index (GII)

The Indicator to measure gender inequality is called Gender Inequality Index (GII). The higher the inequality the bigger the value of the GII. A large GII value means the disparity between males and females is high and an indicator of a lower development rate. Measuring the GII can aid a Government in adopting Pro-women development policies.

The United Nations Development Programme Human Development Reports states that GII is used to measure gender inequality in three important aspects of human development:

(i) Reproductive health which is measured by maternal mortality ratio and adolescent birth rates;

(ii) Empowerment, measured by proportion of parliamentary seats occupied by females and proportion of adult females and males aged 25 years and older with at least some secondary education; and

(iii) Economic status, expressed as labour market participation and measured by labour force participation rate of female and male populations aged 15 years and older.[35]

Today, the Environment has become a major cause of concern. Business initiatives that are meant for development cannot be encourage at the cost of the Environment. Global warming, Climate Change, lack of Fresh water, Depleting fossil fuels have become a matter of grave concern. Development should encourage Sustainable practices. In India, Businesses should be encouraged to adopt Environment friendly sustainable practices which do not cause distress to Nature as well as the Tribals, Adivasis, Fisherfolk, Farmers and those citizens of the country who are dependent on nature for their living. Development therefore includes Sustainable Development goals. And these goals should cater to all and not focus on benefitting Commerce alone.

For a detailed study, as a teacher, I suggest you go through the UNDP Reports. Please check out the links and read the Papers that I have quoted. The above article is not a statistical approach. It is written in light of the subject being taught and to have a basic understanding of what the Indicators of Development are. All the Pictures have been made by me based on the charts available in the UNDP websites. When you use them, please don’t forget to mention citations. All the Best. God bless you!

[2] A. A. Salami, S. L. Tilakasiri and Y. A. Ahmed, The Indicators And Indices Of Development, https://www.researchgate.net/publication/324005468, Downloaded: 27.07.2020

[3] Definition of 'Human Development Index', The Economic Times, https://economictimes.indiatimes.com/definition/human-development-index, Downloaded- 28/07/2020

[4] Max Roser, Human Development Index (HDI), https://ourworldindata.org/human-development-index, Published in 2014, updated in 2019. Downloaded- 28/07/2020

[5] Max Roser, Human Development Index (HDI), https://ourworldindata.org/human-development-index, Published in 2014, updated in 2019. Downloaded- 28/07/2020

[6] United Nations Development Programme(UNDP) , Human development indices and indicators2018 statistical update, Copyright @ 2018 By the United Nations Development Programme1 UN Plaza, New York, NY 10017 USA, Downloaded- 27/07/2020

[7] A. A. Salami, S. L. Tilakasiri and Y. A. Ahmed, The Indicators And Indices Of Development, https://www.researchgate.net/publication/324005468, Downloaded: 27.07.2020

[8] Max Roser, Esteban Ortiz-Ospina and Hannah Ritchie, Life Expectancy, Our World in Data, https://ourworldindata.org/life-expectancy

[9] European University Institute, Human Development Indicators (UN), https://www.eui.eu/Research/Library/ResearchGuides/Economics/Statistics/DataPortal/HDR

[10] Dr. Ananya Mandal, February 26, 2019, What is Life Expectancy, News Medical Life Sciences, https://www.news-medical.net/health/What-is-Life-Expectancy.aspx

[11] UNESCO Institute for Statistics, http://uis.unesco.org/en/glossary-term/literacy-rate

[12] A. A. Salami, S. L. Tilakasiri and Y. A. Ahmed, The Indicators And Indices Of Development, https://www.researchgate.net/publication/324005468, Downloaded: 27.07.2020

[13] UNESCO Institute for Statistics, http://uis.unesco.org/en/glossary-term/literacy-rate

[14] Gross National Income (GNI) in Purchasing Power Parity (PPP) per capita, UN Environment Programme GRID Arendal, https://www.grida.no/resources/5745

[15] Nationsonline, https://www.nationsonline.org/oneworld/GNI_PPP_of_countries.htm

[16] Kimberly Amadeo, Gross National Income, June 04, 2020, The Balance, https://www.thebalance.com/gross-national-income-4020738

[17] Peter Bondarenko, Gross national income, https://www.britannica.com/topic/gross-national-income

[18] https://www.bea.gov/resources/learning-center/what-to-know-gdp

[19] https://www.investopedia.com/terms/g/gross-national-income-gni.asp

[20] https://data.oecd.org/natincome/gross-national-income.htm

[21] Gross National Product, https://economictimes.indiatimes.com/definition/gross-national-product

[22] Jim Chappelow, Reviewed By Brian Barnier, Mar 20, 2020, Gross National Product (GNP), Investopedia, https://www.investopedia.com/terms/g/gnp.asp

[23] A. A. Salami, S. L. Tilakasiri and Y. A. Ahmed, The Indicators And Indices Of Development, https://www.researchgate.net/publication/324005468, Downloaded: 27.07.2020

[24] A. A. Salami, S. L. Tilakasiri and Y. A. Ahmed, The Indicators And Indices Of Development, https://www.researchgate.net/publication/324005468, Downloaded: 27.07.2020

[25] https://www.investopedia.com/terms/g/gdp.asp

[26] https://www.britannica.com/topic/gross-domestic-product

[27] FE Knowledge Desk, Financial Express, https://www.financialexpress.com/what-is/gross-domestic-product-gdp-meaning/1619044/

[28] Jim Chappelow, Reviewed By Brian Barnier, Mar 20, 2020, Gross National Product (GNP), Investopedia, https://www.investopedia.com/terms/g/gnp.asp

[29] Encyclopaedia Britannica, Gross national product, https://www.britannica.com/topic/gross-national-product

[30] European University Institute, Human Development Indicators (UN), https://www.eui.eu/Research/Library/ResearchGuides/Economics/Statistics/DataPortal/HDR

[31] United Nations Development Programme and Oxford Poverty and Human Development Initiative, Global Multidimensional Poverty Index 2020,

[32] Gast ́on Yalonetzky, March 2011, Inequality-adjusted HDI: the basics, http://www.ophi.org.uk/wp-content/uploads/IHDI-the-basics.pdf

[33] United Nations Development Programme Human Development Reports, Gender Inequality Index (GII), http://hdr.undp.org/en/content/gender-inequality-index-gii

[34] United Nations Development Programme Human Development Reports, Gender Development Index (GDI), http://hdr.undp.org/en/content/gender-development-index-gdi

[35] United Nations Development Programme Human Development Reports, Gender Inequality Index (GII), http://hdr.undp.org/en/content/gender-inequality-index-gii

Communication studies blog by Sis Michelle

Tuesday 4 August 2020

DEVELOPMENT COMMUNICATION FOR BJMC- Indicators of Development