Indicators of Development

Gross Domestic Product (GDP)

• Total production of a country in a given time period (usually 1 year)

• Measure of economic wealth• Used by World Bank

Limitations of GDP• Does not reflect distribution of wealth and

inequalities (only aggregate wealth)• Does not account for subsistence or informal

economies • Limited to economic growth• Not representative of standard of living in a

particular country• Adverse events (i.e. natural disasters) are not

accounted for

Human Development Index (HDI)

• Created by United Nations as more comprehensive measure of “development”

• Measures longevity, knowledge, and standard of living

• Uses these criteria: • GDP per capita (standard of living)• Life expectancy (longevity)• Literacy rate (education)• Attendance in primary, secondary & higher

education (education)• Number between 0 and 1

Case Study: India• 2nd fastest growing economy in the world (by GDP

growth)• Among lowest quarter of HDI ranks (135th/187)• Extreme urban and rural poverty• Insufficient national spending on health, education,

etc.

GDP (USD)

GDP Growth (annual %)

HDI