Measuring Development

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Measuring Development
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Argument

• Over time, capitalist economic systems inevitably
  develop increasing inequality within a population
  because factors of production such as capital,
  land, and entrepreneurship become concentrated in
  the hands of the wealthy.

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(No Transcript)
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• Does GDP per capita give a reasonable estimate of
  the welfare of a nations population?

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Measuring inequality The Lorenz Curve

• The further the Lorenz Curve is from midpoint
  line, the more inequality that exists

http//content.answers.com/main/content/img/oxford
/Oxford_Geography/0198606737.lorenz-curve.1.jpg
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Gini Index

• Higher Gini Index Higher Inequality

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Gini Coefficient

• Gini Coefficient A/(A B)
• Range 0-1

If A is small because there is little inequality
in the country, the coefficient will be close
to zero.
Real World Approximate Range 0.25 (Denmark) to
0.70 (Namibia)
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Gini Index

• Gini Index Gini Coefficient A/(A B) x 100
• Range 0-100

Namibia 70.7 South Africa 65 Philippines
45.8 United States 45 Japan 38.1 India 36.8 South
Korea 31.3 Sweden 25
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Choose two countries below, draw a Lorenz Curve
for each on the same graph to compare inequality
among their citizens, and use it to explain (in a
brief paragraph) whether income inequality tends
to be a bigger issue among MEDCs or LEDCs.

• 21Swaziland50.4
• 22Gambia, The50.2
• 23Zimbabwe50.1
• 24Dominican Republic49.9
• 25Peru49.6
• 26Sri Lanka49.0
• 27Mexico48.2
• 28Costa Rica48.0
• 29Singapore47.8
• 30Madagascar47.5
• 31Mozambique47.3
• 32Nepal47.2
• 33Uruguay47.1
• 34Ecuador46.9
• 35Rwanda46.8
• 36Philippines45.8
• 37Uganda45.7
• 38Jamaica45.5
• 39United States45.0

• 1Namibia70.7
• 2South Africa65.0
• 3Lesotho63.2
• 4Botswana63.0
• 5Sierra Leone62.9
• 6Central African Republic61.3
• 7Haiti59.2
• 8Colombia58.5
• 9Bolivia58.2
• 10Brazil56.7
• 11Guatemala55.1
• 12Honduras53.8
• 13Hong Kong53.3
• 14Paraguay53.2
• 15El Salvador52.4
• 16Chile52.4
• 17Panama51.0
• 18Papua New Guinea50.9
• 19Zambia50.8

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• Does foreign direct investment by multinational
  corporations (MNCs) improve the welfare of the
  citizens of developing countries or does it lead
  to increased inequality among citizens?

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• Does investment by MNCs appears to be benefitting
  the typical citizen in each country?
• Developing Countries
• Brazil 56.7
• China 41.5
• Mexico 48.2
• Thailand 43
• Malaysia 44.1
• India 36.8

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• How should we define development given the fact
  that our definition will guide economic policy?

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Economic Growth vs Development
Development Where increases in real GDP per
capita are accompanied by increases in standards
of living Increases in welfare Increases in
human freedom
Economic Development
Growth
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If we dont know what development is, how do we
measure it?

• 2000 UN Millenium Development Goals

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HDIHuman Development Index

• Composite Index
• Health Life Span
• EducationLiteracy School enrolment
• GDP/capita

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Anomalies

• Saudi Arabia- 44th GDP/capita, 77th HDI

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South Africa

• 52nd GDP/capita, 120th HDI

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Ecuador

• 112th GDP/capita, 82nd HDI

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Sweden

• 20th GDP/capita, 6th HDI

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Zimbabwe

• 125th GDP/capita, 145th HDI

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Gender MeasurementsUN Millenium Goals

• Goal 3 Promote gender equality and empower women
• Target 4 Eliminate gender disparity in primary
  and secondary education, preferably by 2005, and
  in all levels of education not later than 2015
• Ways of Measuring
• -Ratio of girls to boys in primary, secondary and
  tertiary education
• -Ratio of literate women to men, 1524 years old
• -Share of women in wage employment in the
  non-agricultural sector
• -Proportion of seats held by women in national
  parliament

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Gender Measurements

• Gender-related Development Index (GDI)
• GDI HDI adjusted for inequality between men and
  women
• If GDI is lower than HDI, more inequality
• Gender Empowerment measure (GEM)
• of women in leadership, management, and
  parliament positions
• Share of national income

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HPIHuman Poverty Index

• Proportion of people not meeting a basic level of
  each of the HDI goals
• who do not reach age 40
• of adults who are illiterate
• of pop without access to safe water of kids
  who are underweight
• Human Poverty Index Map

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GPI Genuine Progress Indicator

• Website explaining GPI

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Review

1. What is development?
2. How is development measured?