Human Development Index

Economic development measures the quality of growth, rather than merely an increase in incomes. In order to measure the quality of growth we may take into account access to resources, living standards, the ability to make choices and the sustainability of growth. Composite indicators such as the HDI have been developed by the United Nations to combine the advantages of GDP measures and non-GDP economic and social indicators.

The HDI is a measure of standards of living used since 1990. It comprises three equally weighted elements: one-third health (life expectancy), one-third education (literacy rates), and one-third GDP.

The HDI is a helpful measure of development because it uses reliable and fairly easy-to-obtain indicators, takes income into account but qualifies income in terms of the cost of living. The figures chosen have been judged to those that can be recorded with the most consistency.

However, the HDI has some problems: it gives no indication of the distribution of incomes, and an indication of deprivation might make it more useful. Life expectancy is easy to measure but it doesn't give indication of quality of lige. Literacy measure might be seen as placing too much emphasis on academic knowledge.

GDP is the sum of all goods and servies produced in a country in one year. It is also the sum of all incomes earned in one year, and the sum of all expenditure in one country in one year. Increases in GDP are therefore a sign that a country is experiencing increasing incomes, outputs and spending. On the face of it, this is a good thing because people can have more goods and services, implying that they have a better standard of living. However, there are many reasons why this may not be the case. Standards of living therefore include factors besides economic growth, although few believe that economic growth has no part to play in increasing living standards.

HOWEVER - PROBLEMS WITH COMPARISON:

• subsistence, barter and the black economy.
• currency values
• income distribution
• size of the public sector
• quality issues

One indicator which signifies not just standards of living but potential for development is the measure of mobile phones per thousand of the population. Mobile technology allows a catch of fish to be brought into a port where prices are highest, or can be used to develop a cashless trading system in a country where the currency and finance systems are insecure. Mobiles don't rely on a constant supply of electricity and are therefore a strong indication that a country can develop despite problems in infrastructure.

Another very helpful indicator is the proportion of workers involved in agriculture. In Asia and sub-Saharan Africa, around two-thirds of the workforce is employed in agriculture. In Latin America the proportion is about 25% but in developed countries the figure is usually below 2%. The greater the proportion, the less likely it is that the country has high actual or potential growth. The marginal product of labour in agriculture is likely to be very low, and workers are likely to have little income and little access to other forms of work where incomes could rise. However, living in an agricultural environment does provide some protection from international shocks such as global recession, in that the produce can be life sustaining if not always income generating.

• Group of Amazonian Indians who live in rainforests
• TRied to maintain a traditional, normadic way of life
• Live in large communal dwellings
• Between 10 to 20 families all together
• Sustainable way of life
• Boys taught to hunt, girls grow crops and cook
• Toursim increased = new comers scare animals with noise, planes and machinery
• Poison rivers with mercury, used to purify good, separating gold from the rocks. The mercury then ascends into the food chain and eventually affects child development. This has increased child mortality rates.

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