Concepts and Indicators of Development
This domain tests whether you can distinguish economic growth from development, use common indicators, and explain their strengths and limits. Exam questions often ask you to compare countries or interpret data.
Growth and development
GDP growth measures the value of output produced in an economy. Development is broader: it includes income, health, education, equity, participation and sustainability. Amartya Sen's capability approach frames development as expanding what people are able to do and be.
Indicators to know
- GDP/GNI per capita measures average income; use PPP when comparing living standards across countries.
- HDI combines life expectancy, schooling and GNI per capita. It is a composite index, not a measure of inequality.
- Gini coefficient measures income inequality from 0 (perfect equality) to 1 (perfect inequality).
- Multidimensional Poverty Index captures health, education and living standards together.
- Other indicators: infant mortality, literacy, access to safe water, unemployment and gender gaps.
Worked example
Country A has GDP per capita of US$5,000, life expectancy of 55 and adult literacy of 60%. Country B has GDP per capita of US$4,000, life expectancy of 72 and literacy of 95%. GDP alone ranks A higher, but B is likely more developed in human terms. HDI would favour B because it rewards health and education, not income alone. The reasoning matters: income is a means, while longer and better lives are ends.
Namibia illustrates the point. It is an upper-middle-income country, yet its HDI is medium and its Gini coefficient is among the highest in the world, often reported above 0.55. Average income therefore hides deep inequality.
Traps that cost marks
Equating GDP with development; ignoring distribution; comparing nominal GDP without PPP; treating HDI as a poverty measure; forgetting that indicators can be unreliable where informal work and subsistence production are large.