The Meaning of Economic Development Measurements
Introduction Economic Growth and Development
Dr. Patrick Asuming1
1Department of Finance
University of Ghana Business School
The Meaning of Economic Development Measurements
Outline
1 The Meaning of Economic Development
The Meaning of Economic Development
Measurements
What is Economic Growth?
Several denitions of economic growth
It is sustained expansion in the production of goods and services in an economy over time
A steady increase in the market value of goods and services produced by an economy overtime
The Meaning of Economic Development
Measurements
What is Economic Growth?
Several denitions of economic growth
It is sustained expansion in the production of goods and services in an economy over time
A steady increase in the market value of goods and services produced by an economy overtime
The Meaning of Economic Development
Measurements
What is Economic Growth?
Several denitions of economic growth
It is sustained expansion in the production of goods and services in an economy over time
A steady increase in the market value of goods and services produced by an economy overtime
The Meaning of Economic Development
Measurements
What is Economic Growth?
Several denitions of economic growth
It is sustained expansion in the production of goods and services in an economy over time
A steady increase in the market value of goods and services produced by an economy overtime
The Meaning of Economic Development
Measurements
What is Economic Development
Economic development is very broad and has various denitions
The meaning of economic development has also changed over time
Broadly speaking,the process of economic development refers to sustained expansion in the capacity of an economy to provide for the material wellbeing of its members above and beyond the level of subsistence
Many equate this expansion in capacity with growth of income per capita
The Meaning of Economic Development
Measurements
What is Economic Development
Economic development is very broad and has various denitions
The meaning of economic development has also changed over time
Broadly speaking,the process of economic development refers to sustained expansion in the capacity of an economy to provide for the material wellbeing of its members above and beyond the level of subsistence
Many equate this expansion in capacity with growth of income per capita
The Meaning of Economic Development
Measurements
What is Economic Development
Economic development is very broad and has various denitions
The meaning of economic development has also changed over time
Broadly speaking,the process of economic development refers to sustained expansion in the capacity of an economy to provide for the material wellbeing of its members above and beyond the level of subsistence
Many equate this expansion in capacity with growth of income per capita
The Meaning of Economic Development
Measurements
What is Economic Development
Economic development is very broad and has various denitions
The meaning of economic development has also changed over time
Broadly speaking,the process of economic development refers to sustained expansion in the capacity of an economy to provide for the material wellbeing of its members above and beyond the level of subsistence
Many equate this expansion in capacity with growth of income per capita
The Meaning of Economic Development
Measurements
What is Economic Development
Economic development is very broad and has various denitions
The meaning of economic development has also changed over time
Broadly speaking,the process of economic development refers to sustained expansion in the capacity of an economy to provide for the material wellbeing of its members above and beyond the level of subsistence
Many equate this expansion in capacity with growth of income per capita
The Meaning of Economic Development
Measurements
Values & objectives of Economic Development
Three core values of development (Todaro & Smith, 2009 p.20-22):
Sustenance: ability to meet basic needs Self-esteem: to be a person
Freedom from servitude: to be able to choose
Three objectives of development (Todaro & Smith, 2009 p.22)
to increase the availability and widen the distribution of basic life-sustaining goods such as food, shelter, health and protection
to raise levels of living, including high incomes, provision of more jobs, better education and greater attention to cultural and human values
The Meaning of Economic Development
Measurements
Values & objectives of Economic Development
Three core values of development (Todaro & Smith, 2009 p.20-22):
Sustenance: ability to meet basic needs Self-esteem: to be a person
Freedom from servitude: to be able to choose
Three objectives of development (Todaro & Smith, 2009 p.22)
to increase the availability and widen the distribution of basic life-sustaining goods such as food, shelter, health and protection
to raise levels of living, including high incomes, provision of more jobs, better education and greater attention to cultural and human values
The Meaning of Economic Development
Measurements
Denitions overtime
Economic development was earlier equated with economic growth
Economic development has in the past been seen in terms of planned transformation in the structure of production and employment away from agriculture to manufacturing and services industries
rapid industrialization
Since the 1970s, the denition has been expanded to include redistribution; to ensure reductions in levels of poverty and inequality
The Meaning of Economic Development
Measurements
Denitions overtime
Economic development was earlier equated with economic growth
Economic development has in the past been seen in terms of planned transformation in the structure of production and employment away from agriculture to manufacturing and services industries
rapid industrialization
Since the 1970s, the denition has been expanded to include redistribution; to ensure reductions in levels of poverty and inequality
The Meaning of Economic Development
Measurements
Denitions overtime
Economic development was earlier equated with economic growth
Economic development has in the past been seen in terms of planned transformation in the structure of production and employment away from agriculture to manufacturing and services industries
rapid industrialization
Since the 1970s, the denition has been expanded to include redistribution; to ensure reductions in levels of poverty and inequality
The Meaning of Economic Development
Measurements
Denitions overtime
Further expansion of economic development to make is more multidimensional
development must be conceived of as a multidimensional process involving major changes in social structures, popular attitudes and national institutions, as well as acceleration of economic growth, reduction of inequality and eradication of poverty (Todaro & Smith 2009, p. 16)
Others include political freedoms, satisfactory participation in social and communal life in denition of development
In recent times, removal of gender-related inequalities has become prominent
The Meaning of Economic Development
Measurements
Denitions overtime
Further expansion of economic development to make is more multidimensional
development must be conceived of as a multidimensional process involving major changes in social structures, popular attitudes and national institutions, as well as acceleration of economic growth, reduction of inequality and eradication of poverty (Todaro & Smith 2009, p. 16)
Others include political freedoms, satisfactory participation in social and communal life in denition of development
In recent times, removal of gender-related inequalities has become prominent
The Meaning of Economic Development
Measurements
Denitions overtime
Further expansion of economic development to make is more multidimensional
development must be conceived of as a multidimensional process involving major changes in social structures, popular attitudes and national institutions, as well as acceleration of economic growth, reduction of inequality and eradication of poverty (Todaro & Smith 2009, p. 16)
Others include political freedoms, satisfactory participation in social and communal life in denition of development
In recent times, removal of gender-related inequalities has become prominent
The Meaning of Economic Development
Measurements
Sen's Capabilities approach
Amartya Sen has pioneered the capabilities approach
Sen argues that development extends beyond economic growth to include enhancing the lives we lead and freedoms we enjoy
Measured real income diers from actual advantages because of:
1 personal heterogeneities connected with disability, illness, age, gender
2 environmental diversities (infectious diseases, impact of pollution etc)
3 variation in social climate (prevalence of crime and violence social capital)
The Meaning of Economic Development
Measurements
Sen's Capabilities approach
Amartya Sen has pioneered the capabilities approach
Sen argues that development extends beyond economic growth to include enhancing the lives we lead and freedoms we enjoy
Measured real income diers from actual advantages because of:
1 personal heterogeneities connected with disability, illness, age, gender
2 environmental diversities (infectious diseases, impact of pollution etc)
3 variation in social climate (prevalence of crime and violence social capital)
The Meaning of Economic Development
Measurements
Sen's Capabilities approach
Amartya Sen has pioneered the capabilities approach
Sen argues that development extends beyond economic growth to include enhancing the lives we lead and freedoms we enjoy
Measured real income diers from actual advantages because of:
1 personal heterogeneities connected with disability, illness, age, gender
2 environmental diversities (infectious diseases, impact of pollution etc)
3 variation in social climate (prevalence of crime and violence social capital)
The Meaning of Economic Development
Measurements
Sen's capabilities approach
These important determinants of functionings need to be incorporated into our denition of poverty and development
Capabilities are the freedoms that a person has in terms of the choice of functionings, given personal features (conversion of characteristics into functionings) and his command over commodities (Sen, 1999: Development As Freedom)
The Meaning of Economic Development
Measurements
Sen's capabilities approach
These important determinants of functionings need to be incorporated into our denition of poverty and development
Capabilities are the freedoms that a person has in terms of the choice of functionings, given personal features (conversion of characteristics into functionings) and his command over commodities (Sen, 1999: Development As Freedom)
The Meaning of Economic Development
Measurements
Sen's capabilities approach
These important determinants of functionings need to be incorporated into our denition of poverty and development
Capabilities are the freedoms that a person has in terms of the choice of functionings, given personal features (conversion of characteristics into functionings) and his command over commodities (Sen, 1999: Development As Freedom)
The Meaning of Economic Development
Measurements
Development and Happiness
In recent times attention increasing attention is being paid to happiness in measurement of development
extension of Sen's capabilities approach
French government initiated the Commission on the
Measurement of Economic Performance and Social Progress in 2008 (Stiglitz-Sen-Fitoussi Commission)
OECD in 2011 unveiled new index to measure well-being: Your Better Life Index inspired by the Stiglitz Report
made up of 11 indicators: Housing, Income, Jobs, Community, Education, Environment, Governance, Health, Life
The Meaning of Economic Development
Measurements
Development and Happiness
In recent times attention increasing attention is being paid to happiness in measurement of development
extension of Sen's capabilities approach
French government initiated the Commission on the
Measurement of Economic Performance and Social Progress in 2008 (Stiglitz-Sen-Fitoussi Commission)
OECD in 2011 unveiled new index to measure well-being: Your Better Life Index inspired by the Stiglitz Report
made up of 11 indicators: Housing, Income, Jobs, Community, Education, Environment, Governance, Health, Life
The Meaning of Economic Development
Measurements
Development and Happiness
In recent times attention increasing attention is being paid to happiness in measurement of development
extension of Sen's capabilities approach
French government initiated the Commission on the
Measurement of Economic Performance and Social Progress in 2008 (Stiglitz-Sen-Fitoussi Commission)
OECD in 2011 unveiled new index to measure well-being: Your Better Life Index inspired by the Stiglitz Report
made up of 11 indicators: Housing, Income, Jobs, Community, Education, Environment, Governance, Health, Life
The Meaning of Economic Development
Measurements
UN approach: Human Development Index
HDI is to-date the most ambitious attempt to capture key aspects of economic development in one index for all (almost all) countries
Published by the United Nations Development Program (UNDP) in its annual Human Development Report
The HDI is based on three goals/ends of economic development:
longevity: life expectancy at birth
knowledge: weighted average of adult literacy and years of schooling
living standards: real per capita GDP
The Meaning of Economic Development
Measurements
UN approach: Human Development Index
HDI is to-date the most ambitious attempt to capture key aspects of economic development in one index for all (almost all) countries
Published by the United Nations Development Program (UNDP) in its annual Human Development Report
The HDI is based on three goals/ends of economic development:
longevity: life expectancy at birth
knowledge: weighted average of adult literacy and years of schooling
living standards: real per capita GDP
The Meaning of Economic Development
Measurements
UN approach: Human Development Index
HDI is to-date the most ambitious attempt to capture key aspects of economic development in one index for all (almost all) countries
Published by the United Nations Development Program (UNDP) in its annual Human Development Report
The HDI is based on three goals/ends of economic development:
longevity: life expectancy at birth
knowledge: weighted average of adult literacy and years of schooling
living standards: real per capita GDP
The Meaning of Economic Development
Measurements
UN approach: Human Development Index
HDI is to-date the most ambitious attempt to capture key aspects of economic development in one index for all (almost all) countries
Published by the United Nations Development Program (UNDP) in its annual Human Development Report
The HDI is based on three goals/ends of economic development:
longevity: life expectancy at birth
knowledge: weighted average of adult literacy and years of schooling
living standards: real per capita GDP
The Meaning of Economic Development
Measurements
The Human Development Index
HDI tend to predict that some countries are better than predicted by their income levels
this is a desirable feature
The HDI shows that disparities in income are greater than disparities in the other indicators (education and health)
Criticisms of HDI
gross enrollment overstates that amount of schooling
does not consider dropouts
Does not consider quality of education
The Meaning of Economic Development
Measurements
The Human Development Index
HDI tend to predict that some countries are better than predicted by their income levels
this is a desirable feature
The HDI shows that disparities in income are greater than disparities in the other indicators (education and health)
Criticisms of HDI
gross enrollment overstates that amount of schooling
does not consider dropouts
Does not consider quality of education
The Meaning of Economic Development
Measurements
The Human Development Index
HDI tend to predict that some countries are better than predicted by their income levels
this is a desirable feature
The HDI shows that disparities in income are greater than disparities in the other indicators (education and health)
Criticisms of HDI
gross enrollment overstates that amount of schooling
does not consider dropouts
Does not consider quality of education
The Meaning of Economic Development
Measurements
The Millennium Development Goals
The MDGs was adopted in 2000 by 189 member countries of the UN to make progress towards poverty eradication and other development goals by 2015
The eight MDGs
eradicate extreme poverty and hunger achieve universal primary education
promote gender equality and empower women reduce child mortality
improve maternal health
combat HIV/AIDS, malaria and other diseases ensure environmental sustainability
The Meaning of Economic Development
Measurements
The Millennium Development Goals
The MDGs was adopted in 2000 by 189 member countries of the UN to make progress towards poverty eradication and other development goals by 2015
The eight MDGs
eradicate extreme poverty and hunger achieve universal primary education
promote gender equality and empower women reduce child mortality
improve maternal health
combat HIV/AIDS, malaria and other diseases ensure environmental sustainability
The Meaning of Economic Development
Measurements
The Millennium Development Goals
Progress on MDGs have been very uneven
across goals and countries
Majority of countries will not meet majority of goals
On-going discussion of Sustainable Development Goals to replace MDGs
The Meaning of Economic Development
Measurements
The Millennium Development Goals
Progress on MDGs have been very uneven
across goals and countries
Majority of countries will not meet majority of goals
On-going discussion of Sustainable Development Goals to replace MDGs
The Meaning of Economic Development
Measurements
The Millennium Development Goals
Progress on MDGs have been very uneven
across goals and countries
Majority of countries will not meet majority of goals
On-going discussion of Sustainable Development Goals to replace MDGs
The Meaning of Economic Development
Measurements
The Millennium Development Goals
Progress on MDGs have been very uneven
across goals and countries
Majority of countries will not meet majority of goals
On-going discussion of Sustainable Development Goals to replace MDGs
The Meaning of Economic Development
Measurements
Sustainable Development Goals (1)
Ocially known as: Transforming our world: the 2030 Agenda for Sustainable Development
Broad intergovernmental agreement for post 2015 Development Agenda
Adopted in September 2015
The Meaning of Economic Development
Measurements
Sustainable Development Goals (1)
Ocially known as: Transforming our world: the 2030 Agenda for Sustainable Development
Broad intergovernmental agreement for post 2015 Development Agenda
Adopted in September 2015
The Meaning of Economic Development
Measurements
Sustainable Development Goals (1)
Ocially known as: Transforming our world: the 2030 Agenda for Sustainable Development
Broad intergovernmental agreement for post 2015 Development Agenda
Adopted in September 2015
The Meaning of Economic Development
Measurements
Sustainable Development Goals (2)
SDG 1 Poverty: End povery in all its forms everywhere
SDG 2 Food: End hunger, achieve food security and improved nutrition and promote sustainable agriculture
SDG 3 Health: ensure health lives and promote well-being for all at all ages
SDG 4 Education: ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
SDG 5 Women: Achieve gender equality and empower all women and girls
The Meaning of Economic Development
Measurements
Sustainable Development Goals (2)
SDG 1 Poverty: End povery in all its forms everywhere
SDG 2 Food: End hunger, achieve food security and improved nutrition and promote sustainable agriculture
SDG 3 Health: ensure health lives and promote well-being for all at all ages
SDG 4 Education: ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
SDG 5 Women: Achieve gender equality and empower all women and girls
The Meaning of Economic Development
Measurements
Sustainable Development Goals (2)
SDG 1 Poverty: End povery in all its forms everywhere
SDG 2 Food: End hunger, achieve food security and improved nutrition and promote sustainable agriculture
SDG 3 Health: ensure health lives and promote well-being for all at all ages
SDG 4 Education: ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
SDG 5 Women: Achieve gender equality and empower all women and girls
The Meaning of Economic Development
Measurements
Sustainable Development Goals (2)
SDG 1 Poverty: End povery in all its forms everywhere
SDG 2 Food: End hunger, achieve food security and improved nutrition and promote sustainable agriculture
SDG 3 Health: ensure health lives and promote well-being for all at all ages
SDG 4 Education: ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
SDG 5 Women: Achieve gender equality and empower all women and girls
The Meaning of Economic Development
Measurements
Sustainable Development Goals (2)
SDG 1 Poverty: End povery in all its forms everywhere
SDG 2 Food: End hunger, achieve food security and improved nutrition and promote sustainable agriculture
SDG 3 Health: ensure health lives and promote well-being for all at all ages
SDG 4 Education: ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
SDG 5 Women: Achieve gender equality and empower all women and girls
The Meaning of Economic Development
Measurements
Sustainable Development Goals (2)
SDG 1 Poverty: End povery in all its forms everywhere
SDG 2 Food: End hunger, achieve food security and improved nutrition and promote sustainable agriculture
SDG 3 Health: ensure health lives and promote well-being for all at all ages
SDG 4 Education: ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
SDG 5 Women: Achieve gender equality and empower all women and girls
The Meaning of Economic Development
Measurements
Sustainable Development Goals (3)
SDG 7 Energy: Ensure access to aordable, reliable, sustainable and modern energy for all
SDG 8 Economy: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
SDG 9 Insfrastructure: Build resilient insfrastructure, promote inclusive and sustainable industrialization and foster innovation SDG 10 Inequality: Reduce inequality within and among countries
SDG 11 Habitation: Make cities and human settlements inclusive, safe, resilient and sustainable
The Meaning of Economic Development
Measurements
Sustainable Development Goals (3)
SDG 7 Energy: Ensure access to aordable, reliable, sustainable and modern energy for all
SDG 8 Economy: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
SDG 9 Insfrastructure: Build resilient insfrastructure, promote inclusive and sustainable industrialization and foster innovation SDG 10 Inequality: Reduce inequality within and among countries
SDG 11 Habitation: Make cities and human settlements inclusive, safe, resilient and sustainable
The Meaning of Economic Development
Measurements
Sustainable Development Goals (3)
SDG 7 Energy: Ensure access to aordable, reliable, sustainable and modern energy for all
SDG 8 Economy: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
SDG 9 Insfrastructure: Build resilient insfrastructure, promote inclusive and sustainable industrialization and foster innovation
SDG 10 Inequality: Reduce inequality within and among countries
SDG 11 Habitation: Make cities and human settlements inclusive, safe, resilient and sustainable
The Meaning of Economic Development
Measurements
Sustainable Development Goals (3)
SDG 7 Energy: Ensure access to aordable, reliable, sustainable and modern energy for all
SDG 8 Economy: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
SDG 9 Insfrastructure: Build resilient insfrastructure, promote inclusive and sustainable industrialization and foster innovation SDG 10 Inequality: Reduce inequality within and among countries
SDG 11 Habitation: Make cities and human settlements inclusive, safe, resilient and sustainable
The Meaning of Economic Development
Measurements
Sustainable Development Goals (3)
SDG 7 Energy: Ensure access to aordable, reliable, sustainable and modern energy for all
SDG 8 Economy: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
SDG 9 Insfrastructure: Build resilient insfrastructure, promote inclusive and sustainable industrialization and foster innovation SDG 10 Inequality: Reduce inequality within and among countries
SDG 11 Habitation: Make cities and human settlements inclusive, safe, resilient and sustainable
The Meaning of Economic Development
Measurements
Sustainable Development Goals (3)
SDG 7 Energy: Ensure access to aordable, reliable, sustainable and modern energy for all
SDG 8 Economy: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
SDG 9 Insfrastructure: Build resilient insfrastructure, promote inclusive and sustainable industrialization and foster innovation SDG 10 Inequality: Reduce inequality within and among countries
SDG 11 Habitation: Make cities and human settlements inclusive, safe, resilient and sustainable
The Meaning of Economic Development
Measurements
Sustainable Development Goals (4)
SDG 13 Climate: Take urgent action to combat climate change and its impact
SDG 14 Marine-ecosystems: Conserve and sustainably use the oceans, seas and marine resources for sustainable development SDG 15 Ecosystems: Protect, restore and promote sustainable use of terrestial ecosystems, sustainably manage forests, combat desertication, and halt and reverse land degradation and halt biodiversity
SDG 16 Institutions: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build eective, accountable and inclusive institutions at all levels
SDG 17 Sustainable: Strengthen the means of implementation and revitalize the global partnership for sustainable
The Meaning of Economic Development
Measurements
Sustainable Development Goals (4)
SDG 13 Climate: Take urgent action to combat climate change and its impact
SDG 14 Marine-ecosystems: Conserve and sustainably use the oceans, seas and marine resources for sustainable development
SDG 15 Ecosystems: Protect, restore and promote sustainable use of terrestial ecosystems, sustainably manage forests, combat desertication, and halt and reverse land degradation and halt biodiversity
SDG 16 Institutions: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build eective, accountable and inclusive institutions at all levels
SDG 17 Sustainable: Strengthen the means of implementation and revitalize the global partnership for sustainable
The Meaning of Economic Development
Measurements
Sustainable Development Goals (4)
SDG 13 Climate: Take urgent action to combat climate change and its impact
SDG 14 Marine-ecosystems: Conserve and sustainably use the oceans, seas and marine resources for sustainable development SDG 15 Ecosystems: Protect, restore and promote sustainable use of terrestial ecosystems, sustainably manage forests, combat desertication, and halt and reverse land degradation and halt biodiversity
SDG 16 Institutions: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build eective, accountable and inclusive institutions at all levels
SDG 17 Sustainable: Strengthen the means of implementation and revitalize the global partnership for sustainable
The Meaning of Economic Development
Measurements
Sustainable Development Goals (4)
SDG 13 Climate: Take urgent action to combat climate change and its impact
SDG 14 Marine-ecosystems: Conserve and sustainably use the oceans, seas and marine resources for sustainable development SDG 15 Ecosystems: Protect, restore and promote sustainable use of terrestial ecosystems, sustainably manage forests, combat desertication, and halt and reverse land degradation and halt biodiversity
SDG 16 Institutions: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build eective, accountable and inclusive institutions at all levels
SDG 17 Sustainable: Strengthen the means of implementation and revitalize the global partnership for sustainable
The Meaning of Economic Development
Measurements
Sustainable Development Goals (4)
SDG 13 Climate: Take urgent action to combat climate change and its impact
SDG 14 Marine-ecosystems: Conserve and sustainably use the oceans, seas and marine resources for sustainable development SDG 15 Ecosystems: Protect, restore and promote sustainable use of terrestial ecosystems, sustainably manage forests, combat desertication, and halt and reverse land degradation and halt biodiversity
SDG 16 Institutions: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build eective, accountable and inclusive institutions at all levels
The Meaning of Economic Development
Measurements
Development and Growth
What is the relationship between economic development and growth?
Can there be growth without development
The Meaning of Economic Development
Measurements
Development and Growth
What is the relationship between economic development and growth?
Can there be growth without development
The Meaning of Economic Development
Measurements
Development and Growth
What is the relationship between economic development and growth?
Can there be growth without development
