- Define and explain Measuring Development in your own words
- Use key terms such as HDI accurately
- Apply what you have learned to new examples and questions
- Avoid the common mistakes learners make with this topic
Billions of people still live in poverty while others enjoy abundance. Development economics asks why some countries grow rich and others stay poor, how we should measure progress, and which policies genuinely help.
This lesson focuses on Measuring Development: compare GDP, HDI and wider measures of progress.
Compare GDP, HDI and wider measures of progress.
Key ideas
Routes to development
Strategies include foreign aid (which can build infrastructure but risks dependency and corruption), trade liberalisation, attracting FDI, investing in education and health, and microfinance. The East Asian tigers combined export-led growth with strong state investment in human capital — context shapes what works.
Beyond GDP
GDP per capita misses health, education and the environment. The HDI combines income, schooling and life expectancy; critics note it still hides inequality and environmental damage. Sen's capabilities approach goes further, asking what people are actually free to do and be.
Key term — HDI: The Human Development Index: a composite of income, life expectancy and education, scored 0 to 1. It captures broader development than GDP alone.
Country X has GDP per capita of $8,000 and HDI 0.72; Country Y has GDP per capita $6,000 and HDI 0.78. Which is more 'developed'?
On GDP per capita alone, X looks more developed. On the broader HDI measure, Y scores higher. The HDI includes health and education, not just output. Y converts its income into wellbeing more effectively.
Answer: On the broader HDI measure, Y is more developed despite lower income — development is about more than output.
- Equating growth with development Growth raises output; development improves lives — growth without schools, clinics or rights may leave most people behind.
- Assuming aid always helps Aid can fund vital projects but also fuel corruption and dependency; its record is mixed and context-dependent.
Practice
Any one of: ignores health and education, ignores inequality, ignores the environment and unpaid work.
Income (GNI per capita), life expectancy and education.
Perfect income equality.
A cycle where low income means low saving and investment, which keeps income low.
Quick check
Which of these best defines "HDI"?
Why did the East Asian tigers develop rapidly?
Give one advantage and one disadvantage of FDI for a developing country.
- Measuring Development: compare GDP, HDI and wider measures of progress.
- Routes to development: Strategies include foreign aid (which can build infrastructure but risks dependency and corruption), trade liberalisation, attracting FDI, investing in education and health, and microfinance.
- absolute poverty: Living below a fixed income threshold, such as the World Bank's extreme poverty line.
- Watch out for: equating growth with development