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Indicators of Economic Development
The issue of economic development is considered a major challenge for developing nations. Every nation aims to achieve high economic development in every possible way. To understand the extent of economic development in any country, certain indicators are used.
A brief introduction to some major indicators of economic development is given below:
1. Per Capita Income (Per Capita Income)
Per capita income is considered the primary indicator for measuring the level of economic development. The United Nations uses it as a common indicator when determining the economic level of member states. Based on this, the UN classifies countries as high-income, middle-income, and low-income. It is calculated by dividing the total national income by the total population.
2. Physical Quality of Life Index (PQLI)
The Physical Quality of Life Index (PQLI) is another tool for measuring economic development. This index is prepared by incorporating aspects such as average life expectancy, infant mortality rate, and literacy. Its measurement scale ranges from zero to 100 points. This index is high in economies with high per capita income, high literacy, and low infant mortality. If its value is above 50, such an economy is called a developed economy. If its value is below 50, such an economy is called a developing economy.
3. Human Development Index (HDI)
The Human Development Index (HDI) is a method introduced by the United Nations in 1990. This index is measured by incorporating per capita income, average life expectancy, and literacy rate. Its measurement scale ranges from zero to 1. If its value is around zero, it indicates low economic development, and if it is around 1, it indicates high economic development. According to the World Human Development Report 2017, the Human Development Index is as follows:
| Level of Economic Development | Human Development Index |
|---|---|
| Low Human Development | 0.00 to 0.499 |
| Medium Human Development | 0.500 to 0.699 |
| High Human Development | 0.700 to 0.799 |
| Very High Human Development | Above 0.800 |
4. Increase in Productivity of Means of Production (Increase in Factor Productivity)
Land, labor, capital, and organization are the major means of production. Productivity refers to the increase in output per unit of these means. An increase in productivity signifies the ability to produce high-quality goods and services in large quantities at the lowest possible cost. An increase in the capacity of the means of production is also considered an excellent indicator of economic development.
5. Basic Human Needs (Basic Human Needs)
To improve the standard of living, it is essential for the average consumption capacity of every individual and society to increase. For this, basic human needs must be met. This includes the respectable provision of adequate calorie-rich food, comfortable housing, clean drinking water, easy access to education and health, ease in transportation and communication services, and job security for the general public. The state when these needs are fulfilled can be taken as an indicator of economic development.
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