HUMAN DEVELOPMENT LEVEL

(AND HOW DOES MEASURE IT )

One of the key questions to ask about development is the standard of living of the people who live in a country. To measure the differences between developed and underdeveloped countries, it is used development indicators:

1.     Life expectancy: is a statistical measure of how long a person may live, based on the year of their birth, their current age and other demographic factors including gender. So it is an average number of years that would be lived by a group of individuals exposed to the same mortality conditions until they die. The life expectancy has changed along time. For example, in Neolitic era the life expectancy was 33 and now is 67.2 years old.

But the life expectancy depends also on life conditions of a country. The average age to which a person lives. This is, for example, 81 in Spain and 48 in Kenya.

2.     Infant mortality rate: counts the number of babies, per 1000 live births, who die under the age of one. This is 5 in Europe and 61 in Kenya.

3.    Poverty: indices count the percentage of people living below the poverty level, or on very small incomes (eg under 1 dolar per day).

4.     Access to basic services: the availability of services necessary for a healthy life, such as clean water and sanitation.

5.    Access to healthcare: takes into account statistics such as how many doctors there are for every patient.

6.  Risk of disease: calculates the percentage of people with diseases such as AIDS, malaria and tuberculosis.

7.   Access to education: measures how many people attend primary school, secondary school and higher education.

8.     Literacy rate: is the percentage of adults who can read and write. This is 99 per cent in the UK, 85 per cent in Kenya and 60 per cent in India.

9.   Access to technology: includes statistics such as the percentage of people with access to phones, mobile phones, television and the internet.

10.  Male/female equality: compares statistics such as the literacy rates and employment between the sexes.

11.  Government spending priorities: compares health and education expenditure with military expenditure and paying off debts.

12.  GDP (Gross Domestic Product):  It represents the total dollar value of all goods and services produced over a specific time period. This is, sometimes, the most difficult concept to understand, so we are going to explain it thoroughly in a new chapter.

GROSS DOMESTIC PRODUCT EXPLAINED

WATCH THE VIDEOS FOCUSING ON THE FOLLOWING CONCEPTS

FINAL USER OR FINAL GOOD - INTERMEDIATE USER OR INTERMEDIATE GOOD - SERVICES – EXPORTS - INFLATION - REAL GDP- NOMINAL GDP

DIFFERENCES BETWEEN GDP and GDP per capita

The gross domestic product or GDP takes into account all of the goods produced and services made available in a country over a specific period of time. However there is a problem with this measure, because sometimes a high GDP in a country does not mean necessarily a high standard of live in the population who lives in it. For example, China’s GDP (over 9 billions of dollars) is much higher than Luxembourg’s GDP (about 40 millions of dollars), but the standard of living in the first one is lower.

Luxembourg’s GDP = 40 millions of dollars

China’s GDP = 9 billions of dollars

Why does Luxembourg have a higher standard of living than China?

So, to solve this lack or information, we use GDP per capita. The GDP per capita is a measure that results from GDP divided by the size of the nation’s overall population.

So in essence, it is theoretically the amount of money that each individual gets in that particular country. The GDP per capita provides a much better determination of living standards as compared to GDP alone. That’s the reason because a country with high GDP but with an overwhelmingly large population, such as China, will result in a low GDP per capita, thus indicating a not so favourable standard of living.

Exercise

The GDP of Spain in 2013 was 1358.26 billion of dollars. Look for the spanish population in this year and calculate the GDP per capita. Now, follow the steps to calculate the GDP per capita in Colombia in this year. Which of them do have higher standard of living?