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The HDI & other measures of economic development
Transcript of The HDI & other measures of economic development
“Health cannot be bought at the supermarket. You have to invest in health. You have to get kids into schooling. You have to train health staff. You have to educate the population.”
- Hans Rosling
Why are the four measures of economic performance limited?
What do they fail to show?
What are the problems with comparing developed and developing countries?
Should there be any other measures to look at?
It is all very well having measures of economic performance...
...but what about quality of growth, living standards and sustainability?
Human Development Index
Developed by the UN and used since 1990
Combines Health, Education and GNI per capita
Benefits of the HDI
Cheap and easy to collect
Widely available information
Shows that GDP is being used to increase social welfare
GNI rank minus HDI rank is a good measure of health and education
Shown as an index or rank
Good scores for education and wealth show successful government policies
HDI can show a potential for development
Limitations of the HDI
No indication of income distribution
Not much indication of quality of life issues - war etc
It could be more human-orientated. Eg gender equality and cultural identity
GNI at PPP is difficult to calculate and may be misleading
There is a new inequality-adjusted HDI now available
Other measures may be needed as well
Watch this video and think how development has improved in Kenya
How many of these improvements would show up in the HDI?
See if you can guess the top five countries for HDI rank
- Have a go at estimating their HDI score
Other measures of economic development?
Mobile phones per 1000 of the population
Access to clean water
Energy consumption per capita
Percentage of adult male labour in agriculture
Combined primary and secondary school enrollment figures
Would there be any problems with using these indicators?
Evaluate the benefits of using the HDI as a measure of economic development. (14)
By the end of the lesson you will be able to:
1. Evaluate the usefulness of the HDI as a measure of economic development
2. Analyse real life applications of the HDI
PPP and Burgernomics
Burgernomics is based on the theory of purchasing-power parity (PPP), the notion that a dollar should buy the same amount in all countries.
Thus in the long run, the exchange rate between two countries should move towards the rate that equalizes the prices of an identical basket of goods and services in each country.
Our "basket" is a McDonald's Big Mac, which is produced in about 120 countries. The Big Mac PPP is the exchange rate that would mean hamburgers cost the same in as abroad.
Comparing actual exchange rates with PPPs indicates whether a currency is under- or overvalued.
To the Computer Suite...
Homework: Finish the presentation