Measurement of Economic Development

Wednesday, July 29, 2020

Economic Development is concerned with the structure of the society's economy and the methods of production of goods and services. Another aspect of development of economy is the development of social and demographic attributes/characteristics.
Economic Development is a dynamic process i.e. continuous process not a static one.
Economic development of a country can be measured/assessed by looking three measures viz.  (1). Economic (2). Social and (3). Demographic

Economic Measures

It constitutes four sub-measures under which Economic Development can be measured assessed.

Per capita Income

Average income earned by the people in a year is called as per capita income. 
Per capita income of highly developed nations are generally higher in comparison to less developed countries such as African and South Asian countries.
Examples:- USA (63,690 PPP dollars in 2018), Japan (44,380 PPP dollars in 2018), India (7,680 PPP dollars in 2018)


Output per worker is known as the productivity. The productivity of economically developed countries are generally very high because most of workers are involved in secondary, tertiary, quaternary and quinary sectors, equipped with advanced technologies, which has very high value of production than the less developed countries in which majority of the workers are working in Primary sector, with very low of technological advances, which has very lesser output value.

Access to Raw Materials

Countries, which has good and easy access to raw materials are world's most developed countries. In 20th century. USA,  China and many other nations grown at a tremendous rate only because of easy access to raw material. Those countries very poor access to raw material are generally lesser developed Example- (Desert countries of Africa).

Production of Commercial Goods

Countries which are economically more developed produces more commercial/luxury goods than the less developed or developing countries.It also signifies countries having high purchasing power. By commercial goods, we mean cars, televisions, computers, Air Conditioners etc.

Social Measures

By this economic development can be assessed under three heads:-

Education Level

Highly developed countries of the world have high income, hence they can afford good education. Hence developed nations are good in both i.e. quantity of education and quality of education.
On the other hand less developed countries have very lesser economic resources and most of these resources are already used for basic needs and very less resources remained for educational purposes.

Health Services

Like education, health is also an important indicator of economic development. Developed countries have very advanced and modern healthcare facilities but on the other hand less developed/developing countries generally lag in health infrastructure. 
Example:- India have only 0.55 beds per 1000 person in government hospitals (on which majority of people depends).
Besides bes and other medical infrastructure the human resource in health services are also better in developed countries than developing countries. For Example India has only 20 health workers/1000 person.

Social Security

In economically developed nations level protection for health/life is very good because most of the people are insured with various kinds insurance policies, but on the hand less developed nations lag Social Security front as most of the people don't have any kind of insurance.
Another aspect of social security is infrastructure for old age, orphaned and physically/mentally handicapped, in which less developed economies lag very much from more developed economies.

Demographic Measures

The level of economic development can also be measured by assessing the demographic attributes of any nation. These attributes are as follows:-

Infant Mortality Rate 

The number of children died (of below 1 year) per 1000 live births of children is called as the Infant Mortality Rate (IMR).
IMR  is generally higher in less developed countries due to very low level of healthcare facilities. On the hand Developed nations have very less infant mortality rate due to good healthcare services which is reflects higher economic development.
Examples:- IMR of India (29.9 in 2018) and USA(5.8 in 2017).

Natural Increase Rate

The difference in the crude birth rate and crude death rate is called as natural increase rate. This is very much higher in developing countries which puts a lot of strain on such countries and hinders their economic growth.
In less developed African and Asian Nations it as high as 40/1000 while in highly developed nations like in Germany it is as low as 10/1000.

Age Structure

Large difference in birth and death rate changes the age structure of the country.
In developing countries the number of lower age group(less than 20-25 years age) persons, who are basically dependent on parents are higher which puts significant pressure on the earning group and hinders further growth.
On the other hand the developed nations have majority of people in more than 25 years age group due low birth rate as well as low death rate, makes than develop more because dependents are less, hence strain on economy is less.
But some developed economies like Japan has majority of it's population in old age group(more than 60-65 years), who are also dependent on working class hence it also put strain on the economy . But this strain can be controlled by Social Security measures such as pension and insurance for old age people, in which developed countries are capable.
Examples:- Average age of population of different countries are- India (29 years), USA(38.3 years), Japan (48.4 years), China(37 years).

Per Capital Energy Consumption

Energy  drives the economic development of any nation. Hence the per capita energy consumption is a good indicator of economic development. 
Developed economies have very high per capita consumption such as USA, Japan, while less developed and developing economies have very less per capita energy consumption.
Examples:- USA(6,803.92 kg of oil equivalent in 2015, Canada(7,631.34 kg of oil equivalent ‎ in 2015), UK(2,763.98 kg of oil equivalent ‎in 2015), India(636.57 kg of oil equivalent ‎in 2014).