Measuring Development

Part 1 and 2 – Development Data:

High HDI ranking: Canada -according to the 2014 report

• HDI ranking and value: HDI ranking: 8 , HDI value 0.902 (2013) 
• Age structure: relatively okay number of people over the age of 65 (5.3 mil.) and much lower count of under age 5 (2.0 mil.) out of the whole population- 35.2 mil.
• Population growth rate: annual growth rate 1%
• School life expectancy: 15.9 years
• Life expectancy at birth: 81.5 years (2013)
• Total fertility rate: 1.7 children per woman
• Education expenditures:  5.5 % of GDP

Economic Indicators: 

• GDP per capita:  40,588 (PPP $, 2012)
• GDP – composition by sector: 
• 22.0 (%GDP, Gross fixed capital formation), 
• 20.9 (%GDP, General government final consumption expenditure), 
• 53.3 (%GDP, Taxes on income, profit and capital gain) 
• 1.8 (%GDP, Research and development expenditure), 
• 1.5 (%GDP, Share of agriculture, hunting, forestry and fisheries)
• Unemployment rate: 0.9 % of the labour force
• Public debt: 177.6 b (% of GDP) (Domestic credit provided by the banking sector)
• Stock of direct foreign investment – at home: Foreign direct investment, net inflows 2.5% GDP
• Labour force participation 15y and older: 61.6% female, 71.2% male

Dependency ratio: This indicator gives insight into the amount of people of non-working age compared to the number of those of working age. A high ratio means those of working age - and the overall economy - face a greater burden in supporting the aging population.

Canada:

total dependency ratio: 47.3%
youth dependency ratio: 23.5%
elderly dependency ratio: 23.8%

Low HDI ranking: Mali 2014 HDI report

• HDI ranking and value: HDI ranking: 176 , HDI value 0.407 (2013)
• Age structure: almost no population over the age of 65 (0.4 mil.),  3.0 mil. under age 5. out of the total population of 15.3 mil.
• Population growth rate: annual growth rate 3.0%
• School life expectancy: 8.6 years
• Life expectancy at birth: 55.0 years (2013)
• Total fertility rate: 6.9 children per woman
• Education expenditures:  4.7 % of GDP

Economic Indicators: 

• GDP per capita:  1,607 (PPP $,2012)
• GDP – composition by sector: 
• 22.2 (%GDP, Gross fixed capital formation), 
• 17.1 (%GDP, General government final consumption expenditure), 
• 21.8 (%GDP, Taxes on income, profit and capital gain) 
• 0.2 (%GDP, Research and development expenditure), 
• 42.3 (%GDP, Share of agriculture, hunting, forestry and fisheries)
• Unemployment rate: ~8.2% 
• Public debt: 
• 19.9 (% of GDP) (Domestic credit provided by the banking sector)
• 29.1 % of GNI, External debt stock
• 0.67 % of GNI total debt service
• Stock of direct foreign investment – at home: Foreign direct investment, net inflows 1.7% GDP
• Labour force participation 15y and older: 50.6% females, and 81.4% males

Dependency ratio: Mali
total dependency ratio: 100.2%
youth dependency ratio: 95.1%
elderly dependency ratio: 5%

PART 3- the Lorenz curve

As seen on the graph the income share of the both populations of Canada and Mali are very equal and follow the general trend of a Lorenz curve.

Note: Data for Mali is from 2010, but for Canada the data is from year 2000.

PART 4

1.What conclusions can you draw about the correlation between GDP, HDI, income equality, social and economic indicators between developed and developing countries? 

A higher value in one does not mean a higher value in all other indicators. 

2. Does a high HDI correlate with relative income equality? What about low HDI? 

There is a slight correlation with high HDI, countries ranked higher in HDI tend to have lower income inequality, yet there are some exceptions such as USA. -

For countries ranked lower on the HDI there is a lesser of a correlation and more variance. Generally countries classified as medium, low or very low in the HDI have higher income inequality, yet the range of inequality is way more broad and the values for some countries quite equal the ones for countries ranked high or very high by the HDI

3. Is a high GDP indicative of high levels of human development? 

No, not necessarily. Some countries ranked in the first 20 by the HDI have the same or even lower GDP count than the countries ranked last 20 by the HDI.

4. What other conclusions can you draw about economic development, national income, and equality? Economic development generally means higher national income, yet not higher equality for gender or income. 

5. To what extent did your country with low HD exhibit the following characteristics? 

-Low standards of living? low standards of living are present in Mali due to low incomes and high dependence on exports. As well as much of it's food supply depends on weather conditions. low access to sanitation, slightly better situation with drinking water yet still not good.

-Low incomes? very low incomes

-Inequality? As compared with other developing and developed countries, Mali has a relatively low income inequality, 33.3% GINI, (as of 2009) and constantly dropping

-Poor health? poor levels of health are present by the life expectancy as well as high child mortality rate and low birth-weight. 

-Inadequate education? almost half the years of expected years in education as in countries ranked higher in HDI

-Low levels of productivity? Yes

-High rates of population growth and dependency burdens? very high dependency rate especially high youth dependency growth, as a woman will on average have 6-7 children in her life time, yet most people don't live up to 65 years.

-High levels of unemployment? relatively quite high levels of unemployment 

-Dependence on agricultural production and primary product exports? mainly depends on exports of Pearls, precious stones, metals, coins, and agricultural products. ~70% of it's exports.

-Imperfect markets? Suggested to be present for a while but oligopolies are being fought against.

-Dependency on foreign developed countries for trade, access to technology, foreign investment and aid? Receives great amounts of foreign aid from multilateral organizations such as World Bank and bilateral programs funded by the European Union, France, United States, Canada, Netherlands, and Germany.

6. How can you explain the concepts of single and composite indicators? To what extent are these indicators effective?

"A composite indicator measures multi-dimensional concepts (e.g. competitiveness, e-trade or environmental quality) which cannot be captured by a single indicator. Ideally, a composite indicator should be based on a theoretical framework / definition, which allows individual indicators / variables to be selected, combined and weighted in a manner which reflects the dimensions or structure of the phenomena being measured."

A single indicator measures only one aspect such as a health indicator measuring life expectancy at birth rate.

These indicators both single and composite indicators give the most effective and significant descriptions/summaries of a situation in a country when results are compiled together. when measured individually, such as the different single indicators then countries can be ranked very differently. Some countries ranked very high by the HDI have some single indicators on the level of the countries ranked very low by the HDI

Myths about economic development, debunked

● What are the weaknesses and strengths of the Human Development Index (HDI) as an indicator of progress in comparison to GDP/GNP per capita? (Total 5 marks)

the strengths of the HDI include:

• taking in account many other indicators and factors for progress not only the GDP/GNI per capita 

• Shows the quality of life, such as education, life expectancy and access to sanitation

• Helps to determine whether the country is considered developed or developing

The weaknesses of using HDI include:

• Income, knowledge and GDP are confounding variables and are inter-related. 

• while using HDI it is hard to determine which factors influenced others

• Doesn't show the variation of data within a country, such as inequality 

● Explain two reasons why increased investment in education is essential for development in developing economies. (Total 4 marks)

Developing economies are often determined to be that due to low quality of the labour force, meaning the main or only output of the economy are primary commodities. therefore having a labour force with higher education helps for the economy to expand and develop different production opportunities. 
As well as higher education means further expansion or developing of healthcare and education systems through the new labour that is available for the vacancies. 


● What evidence would indicate to an economist that a country is experiencing economic development as well as economic growth? (10 marks)

improvement in quality of life, better education, average life span, lower unemployment, increasing GDP, better money supply, decrease in prices for medicine.


● Evaluate the strategies (based on your findings in gapminder) that may be used to achieve economic development. Refer to real world examples in your answer. (15 marks)

I found a great answer to this, but I don't think it would be too useful to write it out, so I'll just leave this ling here:  https://mudit92.wordpress.com/2010/02/11/rwanda-strategies-to-achieve-economic-growthdevelopment

Workpoint 28.3 and review questions

Big Mac index

http://bigmacindex.org/
The cheapest in Ukraine and most expensive in Switzerland

End of chapter review questions on page 342

1. using a PPF diagram, explain how it is possible for a country to achieve economic growth
-

2. To what extent is it fair to say that economic growth inevitably leads to economic development?

economic growth is known to lead to higher production and sales count, and therefore also higher profits and salary for workers. This all can lead to further rise in government revenue through taxes, which could then be used to develop a better education and healthcare system which lead to economic development through raising living standards.

Yet in developing countries, increase in production will often create negative externalities such as destroying wildlife and lowering the air and freshwater quality- which will greatly decrease the living standards.

3. To what extent could it be argued that all developing countries share the same set of characteristics?
to an extent concerning the problems the country is experiencing about its economic situation. Yet the extent of these problems differ for all developing countries therefore they should be all considered as separate cases.

The main reasons developing countries differ in characteristics come due to it's geographical location which also determines the availability of natural resources and possibilities for production; the country's history and current ethnic and religious background as well as the politic situation in the country.

Examples of two developing countries are Maldives and Angola. One is an island country, the other is a country in Africa, therefore their geographical properties differ greatly and therefore also differing their possibilities in production. Maldives is mainly relying on tourism and services, while Angola is dependent on exporting primary commodities.