The nation’s economic development and social welfare are also considered to measure the nation’s prosperity. Economic development is a concept and an activity in general to assess the core competencies of a nation and it’s innovation, and use the of available resources. This process improves the political, economic, and social well being of the people. When we discuss economic development we often discuss terms like modernization, industrialization, and so on. Many times you confuse industrial development with economic development.
Measures of Economic Development and Social Welfare
Economic development is just policy with aims at improving the social well-being as well as economic conditions of the nation.
While economic growth is a result of rising in GDP as well as market productivity. There are various needs we need to consider while measuring economic development. Here, below we will explain these factors in detail.
- Rise in real per capita income
- Quality of life and expectancy
- Real gross national product
- Human development index
- Gender-related development index
- Poverty index
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Rise in Real per Capita Income
One of the factors that measure the economic development of a nation is the rise in real per capita income.
There’s a perception that whenever the income of individual increases than it’s real income increases.
And when this happens the person is happy and prosperous. But there are some limitations to this.
These limitations through per capita income do not determine whether the rise is due to equal distribution or unequal distribution.
Same is the case with the quality of goods and services being provided and consumed. Further, the quality of public goods also affects economic welfare.
Learn more about Indian Economy here in detail.
Quality of Life and Expectancy
When the basic facilities like water, electricity, and housing are available to anyone that the quality of life is considered as good in that nation.
Here the measuring factor is the needs of the people. These needs are basic needs like access to health, sanitation, education, nutrition, etc.
For this, the main factor is the infant mortality rate. This is the death rate of a child who is less than a year old. While life expectancy is the average life of the population that lives.
Real Gross National Product
As mentioned above, GNP, as well as GDP, are the measuring factors for economic development of a nation. Increase in both of these ensures that the larger availability of the good and services in that country. If this supports the standard of living of the people than it increases the economic conditions of the nation.
But there are some limitations to this as well. Like the increase in the size of GDP does not directly means the more availability of services and goods.
Whenever the GDP is calculated for the current prices, there may be an increase due to price rise. This does not mean the availability of goods and services have increased.
Human Development Index
It includes several factors like long and healthy living, the welfare of the people, etc. This index also includes the standard of living of people, literacy rate, and purchasing power parity in terms of real income.
Gender-related development index
This is popularly known as GDI. This is used to measure gender inequalities by measuring three basic dimensions of human development. They are education, health, and economic resources.
They measure education by calculating expectancy years for schooling for males and females. While health measures the male and female life expectancy during the time of birth.
While economic resources are the command over them is measured by income earned by males as well as females. This index is useful to show the inequality between male and female in the above-mentioned dimensions.
The poverty index which is otherwise called multidimensional poverty index aka MPI helps in identifying various factors. These various factors are health, the standard of living, and education.
For this index, the microdata which is available from surveys is used. This data is collected on the basis of deprivation of toilet, water, cooking fuel, assets, etc. Based on the availability of these factors each person is termed as poor and nonpoor.
The indicators are decided on this basis. For education, they consider two factors, school attainment, and school attendance. School attainment is to determine when no member of the family has attended at least 6 years of schooling.
While school attendance is determined when the child is of the school age is not attending the school. Similarly, for health, the factors are child mortality and health.
While for the standard of living the factors are drinking water, electricity, sanitation, and cooking fuel.
Q. Which index is useful to show the inequality between male and female?
A. Gender-related development index
B. Human development index
C. Gross domestic product
D. None of the above
Answer: A. Gender-related development index