world development indicators1

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World Development Indicators

The World Development Indicators (WDI) is the primary World Bankcollection of development indicators, compiled from ocially-recognized

international sorces! It presents the most crrent and accrate glo"aldevelopment data availa"le, and incldes national, regionaland glo"al estimates! This statistical reference incldes over #$$ indicatorscovering more than %&$ economies! The annal p"lication is released in'pril of each year! The online data"ase is pdated three times a year!

The World Development Indicators are categorized nder dierent

topics for easy to nderstand and coverage! They are

'gricltre and rral development

*conomy and gro+th

ocial development

*nvironment

inancial sector

*nergy and mining

.ealth

Infrastrctre

/overty e0ternal de"t

1ender

/rivate sector

/"lic sector

cience and technology ocial protection of la"or

2limate change

Trade

3r"an development

*dcation

'id eectiveness

These categories are divided into relevant indicators so easily can

access! .ere, data of top &$ contries have "een taken for indicators 1ross

Domestic /rodct (1D/), 1ross national Income /er 2apita, .manDevelopment Inde0 (.DI), Infant mortality rate, 4ife e0pectancy at "irth,

/oplation, literacy, In5ation and nemployment!

http://data.worldbank.org/indicatorhttp://data.worldbank.org/indicator


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Gross Domestic Product

Defnition

'n aggregate measre of prodction e6al to the sm of the gross

vales added of all resident instittional nits engaged in prodction (plsany ta0es, and mins any s"sidies, on prodcts not inclded in the vale of

their otpts)!

1D/ can "e determined in three +ays! They are

The prodction approach

The income approach

The e0penditre approach

The more familiar se of 1D/ estimates is to calclate the gro+th of theeconomy! The pattern of 1D/ gro+th is held to indicate the sccess or

failre of economic policy and to determine +hether an economy is

in recession!

The level of 1D/ in dierent contries may "e compared "y converting

their vale in national crrency according to either the crrent crrency

e0change rate, or the prchasing po+er parity e0change rate!

Gross National Income Per Capita Income

/er-capita income is the overall income of a poplation divided "y the

nm"er of people inclded in the poplation!

Current currency exchange rate

2rrent crrency e0change rate is the e0change rate in the

international foreign e0change market!

The crrent e0change rate method converts the vale of goods and

services sing glo"al crrency e0change rates! The method can oer "etter

indications of a contry7s international prchasing po+er!

Purchasing power parity exchange rate

/rchasing po+er parity e0change rate is the e0change rate "ased on

the prchasing po+er parity (///) of a crrency relative to a selected

standard (sally the 3nited tates dollar)! This is a comparative e0change

http://en.wikipedia.org/wiki/Income_approachhttp://en.wikipedia.org/wiki/Economic_policyhttp://en.wikipedia.org/wiki/Recessionhttp://en.wikipedia.org/wiki/Exchange_ratehttp://en.wikipedia.org/wiki/Foreign_exchange_markethttp://en.wikipedia.org/wiki/Exchange_ratehttp://en.wikipedia.org/wiki/Purchasing_power_parityhttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Income_approachhttp://en.wikipedia.org/wiki/Economic_policyhttp://en.wikipedia.org/wiki/Recessionhttp://en.wikipedia.org/wiki/Exchange_ratehttp://en.wikipedia.org/wiki/Foreign_exchange_markethttp://en.wikipedia.org/wiki/Exchange_ratehttp://en.wikipedia.org/wiki/Purchasing_power_parityhttp://en.wikipedia.org/wiki/United_States_dollar


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rate! The ranking of contries may dier signi8cantly "ased on +hich

method is sed!

The prchasing po+er parity method acconts for the relative

eective domestic prchasing po+er of the average prodcer or consmer

+ithin an economy! The method can provide a "etter indicator of the livingstandards especially of less developed contries, "ecase it compensates

for the +eakness of local crrencies in the international markets! It also

oers "etter indication of total national +ealth!

Reasons or uctuations in GDP and Per Capita income

The prodction fnction tells s that if +e kno+ for things9the size

of the +orkforce, the amont of physical capital, the amont of hman

capital, and the level of technology9then +e kno+ ho+ mch otpt +e are

prodcing! When comparing t+o contries, if +e 8nd that one contry hasmore physical capital, more la"or, a "etter edcated and trained +orkforce

(that is, more hman capital), and sperior technology, then +e kno+ that

contry +ill have more otpt!

Dierences in these inpts can "e o"served! 4arge contries o"viosly

have "igger +orkforces than small contries! :ich contries have more and

"etter capital goods! In the farmlands of rance, tractors and e0pensive

farm machinery are sed, +hile plo+s plled "y o0en in ;ietnam< in .ong

=ong! imilarly, rich contries often have +ell-e6ipped schools,

sophisticated training facilities, and 8ne niversities, +hereas poorercontries provide only "asic edcation! We +ant to "e a"le to say more,

ho+ever! We +old like to kno+ how much these dierent inpts contri"te

to overall economic performance!

The 3nited tates, India, and >iger dier in many +ays! ?ne is simply

the nm"er of people in each contry! The +orkforce in the 3nited tates is

a"ot %&$ million people! The +orkforce in India is more than three times

greater9a"ot @A# million9+hile the +orkforce in >iger is only a"ot &

million people! Ths India has mch more la"or to pt into its prodction

fnction than does >iger!

Dierences in edcation and skills certainly help to e0plain some of

the dierences among contries! :esearchers have fond evidence that

measres of edcational performance are correlated +ith 1D/ per person!

The casality almost certainly rns in "oth directions edcation levels are


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lo+ in >iger "ecase the contry is so poor, and the contry is poor "ecase

edcation is lo+!

;icios circle of poverty is the largest reason of lo+ per capita

income! Developing contries inclding /akistan are trapped into ;2/! '

poor contry is poor forever de to the ;2/! %!$ C poplation is verypoor poplation in /akistan!

3nemployment is the maor case of lo+ per capita income!

3nemployment means no sorce of income and reslt is lo+ per capita

income!

De to "ack+ardness, political insta"ilities and improper availa"ility

of infrastrctre the attraction for foreign investment is not sita"le! 4ack

of foreign investment means less employment opportnities and lo+ per

capita income!

Techni6es of prodctions sed "y developing contries are "ack+ard!

De to ot-dated methods of prodction, prodctivity level is lo+! 4o+

level of prodctivity means narro+ness of market and redction in e0ports

and increase in imports!

Im"alanced distri"tion of resorces is an additional case of lo+

per capita income! This sitation leads to increase the gap "et+een rich

and poor! De to ndesira"le distri"tion of income and +ealth, poor

poplation is na"le to take part in economic activities to remove poverty!

:apidly rising poplation is also a case of poverty! *0isting

poplation is already not provided "asic necessities of life! Therefore,

increase in poplation +ill lead to decrease the per capita income!

4o+ per capita income is also de to dishonesty and corrption in

management! ?cers receive a hge amont of illegal money for the

legal and illegal o"! These nnecessary payments redce the savings of

poor and reslt is lo+ per capita income!

4ack of edcation and training is also a case of lo+ per capita

income! It redces the a"ilities to +ork! ometimes a +orker de to

illiteracy remains nemployed or nderemployed! imilarly, lack of skill in

entreprener also redces his pro8t and its reslt is lo+ per capita

income!


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>on-availa"ility or availa"ility of "ack+ard infrastrctre is also an

additional reason of lo+ per capita income and poverty! 4o+ level of

edcation, "ack+ard state of technology, poor health, ineciency of la"or

and poor system of transportation E commnication are case lo+ per

capita income and poverty! Back+ard infrastrctre cases lo+ attraction

for foreign investment!

/ressre of foreign conties in or economic activities, "ack+ard

standard of prodctivities and improper "asic facilities to poplation

redces the living standard of poplation! 4o+ living standard is a sym"ol

of lo+ per capita income!


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!ie expectancy at "irth

4ife e0pectancy at age x is the mean nm"er of years that +old "e lived "y

a grop of individals of age x e0posed ntil death to speci8c mortality

conditions! The most commonly sed life e0pectancy is life e0pectancy atage zero, that is, at "irth (4*B)!

The oldest con8rmed recorded age for any hman is % years! This is

referred to as the Fma0imm life spanF, +hich is the pper "ondary of life,

the ma0imm nm"er of years any hman is kno+n to have lived!

*conomic circmstances also aect life e0pectancy! or e0ample, in the

3nited =ingdom, life e0pectancy in the +ealthiest areas is several years

longer than in the poorest areas! This may re5ect factors sch as diet and

lifestyle, as +ell as access to medical care! It may also re5ect a selectiveeect people +ith chronic life-threatening illnesses are less likely to

"ecome +ealthy or to reside in aGent areas!

Calculation o !ie expectancy

The most common methods sed for calclating life e0pectancy are

it a mathematical formla to the data!

or relatively small amonts of data, an esta"lished mortality ta"le for

a larger poplation and make a simple adstment to it to 8t the data! With a large amont of data, one looks at the mortality rates actally

e0perienced at each age!

4ife e0pectancy is one of the factors in measring the .man

Development Inde0 (.DI) of each nation, along +ith adlt literacy,

edcation, and standard of living!

4ife e0pectancy is also sed in descri"ing the physical 6ality of life of an

area or, for an individal, +hen determining the vale of a life settlement, a

life insrance policy sold for a cash asset!

Disparities in life e0pectancy are often cited as demonstrating the need

for "etter medical care or increased social spport! ' strongly associated

indirect measre is income ine6ality!

http://en.wikipedia.org/wiki/Maximum_life_spanhttp://en.wikipedia.org/wiki/Mortality_tablehttp://en.wikipedia.org/wiki/Human_Development_Indexhttp://en.wikipedia.org/wiki/Human_Development_Indexhttp://en.wikipedia.org/wiki/Physical_quality-of-life_indexhttp://en.wikipedia.org/wiki/Income_inequalityhttp://en.wikipedia.org/wiki/Maximum_life_spanhttp://en.wikipedia.org/wiki/Mortality_tablehttp://en.wikipedia.org/wiki/Human_Development_Indexhttp://en.wikipedia.org/wiki/Human_Development_Indexhttp://en.wikipedia.org/wiki/Physical_quality-of-life_indexhttp://en.wikipedia.org/wiki/Income_inequality


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Inant mortality rate

Defnition

Infant mortality is the death of a child less than one year of age!

2hildhood mortality is the death of a child "efore the child7s 8fth "irthday!>ational statistics tend to grop these t+o mortality rates together! 1lo"ally,

ten million infants and children die each year "efore their 8fth "irthday< HHC

of these deaths occr in developing nations! Infant mortality takes a+ay

society7s potential physical, social, and hman capital!

Infant mortality rate (I:) is the nm"er of deaths of children less

than one year of age per %$$$ live "irths! The rate for a given region is the

nm"er of children dying nder one year of age, divided "y the nm"er of

live "irths dring the year, mltiplied "y %,$$$!

The infant mortality rate correlates very strongly +ith, and is among

the "est predictors of, state failre! I: is therefore also a sefl indicator of

a contry7s level of health or development, and is a component of

the physical 6ality of life inde0!

Calculation o I#R

The method of calclating I: often varies +idely "et+een contries!

easrements provide a statistical +ay of measring the standard of living

of residents living in each nation! Increases and decreases of the infant

mortality rate re5ect social and technical capacities of a nations7 poplation!

3>I2* ses a statistical methodology to accont for reporting dierences

among contries! The World .ealth ?rganization (W.?) de8nes a live "irth

as any "orn hman "eing +ho demonstrates independent signs of life,

inclding "reathing, heart"eat, m"ilical cord plsation or de8nite

movement of volntary mscles.

Causes o higher inant mortality rate

4eading cases of congenital infant mortality are

malformations, sdden infant death syndrome, maternal complications

dring pregnancy, and accidents and nintentional inries! *nvironmental

and social "arriers prevent access to "asic medical resorces and ths

contri"te to an increasing infant mortality rate< HHC of infant deaths occr

in developing contries! 1reatest percentage redction of infant mortality

http://en.wikipedia.org/wiki/Deathhttp://en.wikipedia.org/wiki/Developing_nationshttp://en.wikipedia.org/wiki/Physical_quality_of_life_indexhttp://en.wikipedia.org/wiki/UNICEFhttp://en.wikipedia.org/wiki/World_Health_Organizationhttp://en.wikipedia.org/wiki/Sudden_infant_death_syndromehttp://en.wikipedia.org/wiki/Deathhttp://en.wikipedia.org/wiki/Developing_nationshttp://en.wikipedia.org/wiki/Physical_quality_of_life_indexhttp://en.wikipedia.org/wiki/UNICEFhttp://en.wikipedia.org/wiki/World_Health_Organizationhttp://en.wikipedia.org/wiki/Sudden_infant_death_syndrome


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occrs in contries that already have lo+ rates of infant mortality! 2ommon

cases are preventa"le +ith lo+-cost measres! In the 3nited tates, a

primary determinant of infant mortality risk is infant "irth +eight +ith lo+er

"irth +eights increasing the risk of infant mortality! The determinants of lo+

"irth +eight inclde socio-economic, psychological, "ehavioral and

environmental factors!

Ran$ing o countries according to Inant mortality rate %I#R&

Data sorce +ikipedia!org


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'dult !iteracy rate

Defnition

4iteracy is traditionally nderstood as the a"ility

to read and +rite! The term7s meaning has "een e0panded to incldethe a"ility to se langage, nm"ers, images and other means to

nderstand and se the dominant sym"ol systems of a cltre!

4iteracy represents the lifelong, intellectal process of gaining

meaning from a critical interpretation of +ritten or printed te0t! The

key to all literacy is reading development, a progression of skills that

"egins +ith the a"ility to nderstand spoken +ords and decode

+ritten +ords!

any policy analysts consider literacy rates as a crcial measre of the vale of a region7s hman capital! or e0ample, literate people

can "e more easily trained than illiterate people - and generally have

a higher socioeconomic stats! Ths they enoy "etter health and

employment prospects! 4iteracy increases o" opportnities and

access to higher edcation!

Calculation o !iteracy rate

4iteracy rate is calclated "y nm"er of 4iterate persons

divided "y total poplation and mltiply "y %$$! ppose +e +ant tocalclate the 4iteracy :ate of /oplation 'ged A and a"ove, the

nm"er of literates is #, @A,&H and its poplation aged A and a"ove

is H, &,@A#!

#, @A,&H divided "y H, &,@A# J $!H%@@%

mltiply $!H%@@% "y %$$ J H%!

Therefore, 4iteracy :ate for /oplation 'ged A and a"ove is H%!!

1D/ can indeed aect the literacy rate! If the contry has a high

1D/ then it can provide free edcation to poor +hich +ill improve theliteracy rate!

Reasons "ehind lower literacy rate o countries

The literacy rate cannot increase mainly "ecase of the illiterate +oman

poplation in the 4D2Ks +hich comprises more than half of the poplation!

http://en.wikipedia.org/wiki/Reading_(process)http://en.wikipedia.org/wiki/Writinghttp://en.wikipedia.org/wiki/Written_languagehttp://en.wikipedia.org/wiki/Reading_(process)http://en.wikipedia.org/wiki/Human_capitalhttp://en.wikipedia.org/wiki/Higher_educationhttp://en.wikipedia.org/wiki/Reading_(process)http://en.wikipedia.org/wiki/Writinghttp://en.wikipedia.org/wiki/Written_languagehttp://en.wikipedia.org/wiki/Reading_(process)http://en.wikipedia.org/wiki/Human_capitalhttp://en.wikipedia.org/wiki/Higher_education


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The 1D/ for edcation is less than it shold "e! *ven this is not sed

honestly!

The lack of resorces cannot "e "lamed, "ecase the Lapanese get over

this pro"lem in not more than $ to & years of their independence!

imilarly, 2"a, omalia and ;ietnam did face these hrdles as they +ere in

crisis at their initial years too! The only dierence is that they gave policies

and implemented them +hile other 4D2Ks only laid emphasis on giving

policy docments rather than implement them! The only gap "et+een the

policies and literacy is the lack of implementation!

The other main isses inclde lack of proper monitoring and checks and

"alances, especially in p"lic-sector edcation! ?nly proper monitoring and

a sond, corrption-free system can eradicate the gap "et+een the nation

and development! 'part from it, adlt literacy is "adly needed and thesegovernments shold take action to this end!

'lso, the 1D/ mst "e raised to at least 8ve per cent! The edcation

minister mst "e a person from the edcation sector +ho has the deepest

kno+ledge of the 8eld and enogh e0perience in solving edcational

pro"lems, not a politician!


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Ran$ing o countries according to 'dult literacy rate

Data sorce Wikipedia!org


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(uman Development Index

Defnition

The .man Development Inde0 (.DI) is a statistical tool sed tomeasre a contry7s overall achievement in its social and economic

dimensions!

The .man Development Inde0 (.DI) is a composite statistic of life

e0pectancy, edcation, and income indices sed to rank contries into for

tiers of hman development! It +as created "y Indian economist 'martya

en and /akistani economist ah""-l-.a6 in %HH$!

The .DI +as created to emphasize that people and their capa"ilities

shold "e the ltimate criteria for assessing the development of a contry,not economic gro+th alone! The .DI can also "e sed to 6estion national

policy choices, asking ho+ t+o contries +ith the same level of 1>I per

capita can end p +ith dierent hman development otcomes! These

contrasts can stimlate de"ate a"ot government policy priorities!

Calculation o (DI

The .DI +as calclated sing the follo+ing indicators

.ealth - 4ife e0pectancy at "irth

*dcation - e0pected years schooling for school-age children andaverage years of schooling in the adlt poplation

Income - measred "y 1ross >ational Income (1>I) per capita (///

3M)

The indicators of the three dimensions are cali"rated and com"ined to

generate an .DI score "et+een zero and one! 2ontries are groped into

for hman development categories or 6artiles very high, high, medim

and lo+! ' contry is in the very high grop if its .DI is in the top 6artile, in

the high grop if its .DI is in percentiles &%NA&, in the medim grop if its

.DI is in percentiles ON&$ and in the lo+ grop if its .DI is in the "ottom

6artile!

Western contries have higher .DI "ecase they have improved

edcation as +ell as health sector! They have made more investment in

these areas! 'll factors discssed in section of 1D/ and per capita are also

related +ith .DI!

http://en.wikipedia.org/wiki/Life_expectancyhttp://en.wikipedia.org/wiki/Life_expectancyhttp://en.wikipedia.org/wiki/Index_(economics)http://en.wikipedia.org/wiki/Human_development_(humanity)http://en.wikipedia.org/wiki/Amartya_Senhttp://en.wikipedia.org/wiki/Amartya_Senhttp://en.wikipedia.org/wiki/Mahbub_ul_Haqhttp://en.wikipedia.org/wiki/Life_expectancyhttp://en.wikipedia.org/wiki/Life_expectancyhttp://en.wikipedia.org/wiki/Index_(economics)http://en.wikipedia.org/wiki/Human_development_(humanity)http://en.wikipedia.org/wiki/Amartya_Senhttp://en.wikipedia.org/wiki/Amartya_Senhttp://en.wikipedia.org/wiki/Mahbub_ul_Haq


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ost developing contries have made great progress over the past

several decades dging "y improvements to their .DIs! The average .DI

increased "y @% percent overall and O$ percent for the lo+er 6artile of

developing contries since %HA$! The rapid development of the B:I2

contries from %H#$ to $%% is re5ected in .DI increases of A$ percent

for 2hina, &H percent for India and P$!# percent for Brazil! In 2hina alone,

OOP million people +ere lifted ot of e0treme poverty (i!e!, life on less than

M%!& per day) "et+een %H#% and $$# according to the World Bank!

The .D: classi8es contries into for levels of development "ased on

their .DIs Qvery high hman development,R Qhigh hman development,R

Qmedim hman developmentR and Qlo+ hman development!R *ach level

of development is generally accompanied "y higher income, longer life

e0pectancy and more years of edcation, +hich com"ine to provide people

+ith more capa"ilities, freedoms and choices!

http://www.globalsherpa.org/bric-countries-bricshttp://www.globalsherpa.org/bric-countries-bricshttp://www.globalsherpa.org/chinahttp://www.globalsherpa.org/indiahttp://www.globalsherpa.org/brazil-brasilhttp://www.globalsherpa.org/bric-countries-bricshttp://www.globalsherpa.org/bric-countries-bricshttp://www.globalsherpa.org/chinahttp://www.globalsherpa.org/indiahttp://www.globalsherpa.org/brazil-brasil


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Ran$ing o countries according to (uman Development IndexData sorce +ikipedia!org


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Population

Defnition

The entire pool from +hich a statistical sample is dra+n is called

poplation! The information o"tained from the sample allo+s statisticians todevelop hypothesis a"ot the larger poplation! :esearchers gather

information from a sample "ecase of the diclty of stdying the entire

poplation! 's of today7s date, the +orld poplation is estimated "y

the 3nited tates 2enss Brea to "e A!%A "illion!

/oplation gro+th increased signi8cantly as the Indstrial

:evoltion gathered pace from %A$$ on+ards! The last &$ years have seen a

yet more rapid increase in the rate of poplation gro+th de to medical

advances and s"stantial increases in agricltral prodctivity, particlarly

"eginning in the %HO$s, made "y the 1reen :evoltion! In $$A the 3nited

>ations /oplation Division proected that the +orld7s poplation +ill likely

srpass %$ "illion in $&&!

:apid poplation gro+th rates can make it diclt for contries to

raise standards of living and protect the environment "ecase the more

people there are, the greater the need for food, health care, edcation,

hoses, land, o"s, and energy! 'dding more people to a contryKs

poplation means that the +ealth mst "e distri"ted among more people,

casing 1>/ per capita to decrease at least in the short term!

#easurement o Population density

/oplation density may "e assessed in varios +ays and sing varios

techni6es

2rde Density or 'rithmetic Density is the most common method! It is

a straight measrement of the total nm"er of people per nit of land!

>tritional S/hysiological Density is the nm"er of persons per nit of

area of cltivated land!

'gricltral Density is a density of agricltral poplation over

cltivated area! It is a sefl inde0 of man-land relationship in

primarily an agrarian conte0t!

http://en.wikipedia.org/wiki/Guesstimatehttp://en.wikipedia.org/wiki/United_States_Census_Bureauhttp://en.wikipedia.org/wiki/Population_growthhttp://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Population_growth#Population_growth_ratehttp://en.wikipedia.org/wiki/History_of_medicine#Modern_medicinehttp://en.wikipedia.org/wiki/History_of_medicine#Modern_medicinehttp://en.wikipedia.org/wiki/Green_Revolutionhttp://en.wikipedia.org/wiki/United_Nations_Population_Divisionhttp://en.wikipedia.org/wiki/United_Nations_Population_Divisionhttp://www.worldbank.org/depweb/english/modules/glossary.html#gnppercaphttp://en.wikipedia.org/wiki/Guesstimatehttp://en.wikipedia.org/wiki/United_States_Census_Bureauhttp://en.wikipedia.org/wiki/Population_growthhttp://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Population_growth#Population_growth_ratehttp://en.wikipedia.org/wiki/History_of_medicine#Modern_medicinehttp://en.wikipedia.org/wiki/History_of_medicine#Modern_medicinehttp://en.wikipedia.org/wiki/Green_Revolutionhttp://en.wikipedia.org/wiki/United_Nations_Population_Divisionhttp://en.wikipedia.org/wiki/United_Nations_Population_Divisionhttp://www.worldbank.org/depweb/english/modules/glossary.html#gnppercap


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*conomic Density The ratio "et+een the re6irements of poplation

and the resorces made availa"le to it "y poplation in the areas it

occpies!

:oom density is most commonly sed in r"an stdies! It is the

average nm"er of people per room in a given area!


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)*ects o huge population

't the glo"al level, rising consmption re6ires an increase in

prodction and services so hman +ell"eing is insepara"le from economic

gro+th and +ill have an environmental impact! To meet the needs of a"igger and gro+ing poplation, for instance the distri"tion of goods and

services, especially in developing contries means that +e rgently need to

shift to a sstaina"le economy! 't the local level, there is a need to tackle

environmental-hman relations and give poor people in remote areas a

voice in the sstaina"le development de"ate!

:apidly rising poplation is also a case of poverty! *0isting

poplation is already not provided "asic necessities of life! Therefore,

increase in poplation +ill lead to decrease the per capita income!


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+nemployment

Defnition

3nemployment occrs +hen a person +ho is actively searching for

employment is na"le to 8nd +ork! 3nemployment is often sed as ameasre of the health of the economy! The most fre6ently cited measre of

nemployment is the nemployment rate! This is the nm"er of

nemployed persons divided "y the nm"er of people in the la"or force!

Dring periods of recession, an economy sally e0periences a relatively

high nemployment rate! 'ccording to International 4a"or ?rganization

report, more than %HA million people glo"ally or OC of the +orld7s +orkforce

+ere +ithot a o" in $%!

#easurement o unemployment

The I4? descri"es @ dierent methods to calclate the nemployment

rate!

4a"or orce ample rveys are the most preferred method of

nemployment rate calclation since they give the most comprehensive

reslts and ena"les calclation of nemployment "y dierent grop

categories sch as race and gender! This method is the most

internationally compara"le!

?cial *stimates are determined "y a com"ination of information

from one or more of the other three methods! The se of this method has

"een declining in favor of 4a"or rveys!

ocial Insrance tatistics sch as nemployment "ene8ts, are

compted "ase on the nm"er of persons insred representing the total

la"or force and the nm"er of persons +ho are insred that are

collecting "ene8ts! This method has "een heavily criticized de to the

e0piration of "ene8ts "efore the person 8nds +ork!

*mployment ?ce tatistics are the least eective "eing that they

only inclde a monthly tally of nemployed persons +ho enter

employment oces! This method also incldes nemployed +ho are not

nemployed per the I4? de8nition!

Impacts o unemployment

http://en.wikipedia.org/wiki/Recessionhttp://en.wikipedia.org/wiki/International_Labour_Organizationhttp://en.wikipedia.org/wiki/International_Labour_Organizationhttp://en.wikipedia.org/wiki/International_Labour_Organizationhttp://en.wikipedia.org/wiki/Recessionhttp://en.wikipedia.org/wiki/International_Labour_Organizationhttp://en.wikipedia.org/wiki/International_Labour_Organizationhttp://en.wikipedia.org/wiki/International_Labour_Organization


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.igh and persistent nemployment, in +hich economic

ine6ality increases, has a negative eect on s"se6ent long-rn economic

gro+th! 3nemployment can harm gro+th not only "ecase it is a +aste of

resorces, "t also "ecase it generates redistri"tive pressres and

s"se6ent distortions, drives people to poverty, constrains li6idity limiting

la"or mo"ility, and erodes self-esteem promoting social dislocation, nrest

and con5ict! $%P *conomics >o"el prize +inner :o"ert L! heller said that

rising ine6ality in the 3nited tates and else+here is the most important

pro"lem!

3nemployment increases sscepti"ility to malntrition, illness, mental

stress, and loss of self-esteem, leading to depression! 'ccording to a stdy

p"lished in ocial Indicator :esearch, even those +ho tend to "e optimistic

8nd it diclt to look on the "right side of things +hen nemployed! 3sing

intervie+s and data from 1erman participants aged %O to H@ N incldingindividals coping +ith the stresses of real life and not st a volnteering

stdent poplation N the researchers determined that even optimists

strggled +ith "eing nemployed

3nemployment can case nderemployment, and fear of o" loss can

spr psychological an0iety! 's +ell as an0iety, it can case depression, lack

of con8dence, and hge amonts of stress! They +ill "egin to lose social

contacts, and good social skills!

'n economy +ith high nemployment is not sing all of the resorces,speci8cally la"or, availa"le to it! There is a trade-o "et+een economic

eciency and nemployment!

http://en.wikipedia.org/wiki/Economic_inequalityhttp://en.wikipedia.org/wiki/Economic_inequalityhttp://en.wikipedia.org/wiki/Robert_J._Shillerhttp://en.wikipedia.org/wiki/Self-esteemhttp://en.wikipedia.org/wiki/Underemploymenthttp://en.wikipedia.org/wiki/Economic_inequalityhttp://en.wikipedia.org/wiki/Economic_inequalityhttp://en.wikipedia.org/wiki/Robert_J._Shillerhttp://en.wikipedia.org/wiki/Self-esteemhttp://en.wikipedia.org/wiki/Underemployment


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Ran$ing o countries according to +nemployment rateData Source: The World Bank Data


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Ination

Defnition

In5ation is the rate at +hich the general level of prices for goods and

services is rising, and, s"se6ently, prchasing po+er is falling! 2entral"anks attempt to stop severe in5ation, along +ith severe de5ation, in an

attempt to keep the e0cessive gro+th of prices to a minimm! In5ation rate

is the percentage increase in the price of goods and services,

sally annally!

In5ation aects an economy in varios +ays, "oth positive and

negative! >egative eects of in5ation inclde an increase in the opportnity

cost of holding money, ncertainty over ftre in5ation +hich may

discorage investment and savings, and if in5ation +ere rapid enogh,

shortages of goods as consmers "egin hoarding ot of concern that prices+ill increase in the ftre! /ositive eects inclde ensring that central

"anks can adst real interest rates (to mitigate recessions), and

encoraging investment in non-monetary capital proects!

#easurement o Ination

Widely sed price indices for calclating price in5ation inclde the follo+ing

• Commodity price indices, +hich measre the price of a selection of

commodities! In the present commodity price indices are +eighted "y

the relative importance of the components to the Fall inF cost of an

employee!

• Producer price indices (//Is) +hich measres average changes in

prices received "y domestic prodcers for their otpt! This diers from

the 2/I in that price s"sidization, pro8ts, and ta0es may case the

amont received "y the prodcer to dier from +hat the consmer paid!

There is also typically a delay "et+een an increase in the //I and any

evental increase in the 2/I! 'n earlier version of the //I +as calledthe Wholesale /rice Inde0!

• GDP deator is a measre of the price of all the goods and services

inclded in gross domestic prodct (1D/)! The 3 2ommerce

Department p"lishes a de5ator series for 3 1D/, de8ned as its

nominal 1D/ measre divided "y its real 1D/ measre!

http://www.investorwords.com/10595/percentage_increase.htmlhttp://www.investorwords.com/3807/price.htmlhttp://www.investorwords.com/2209/goods.htmlhttp://www.investorwords.com/6664/service.htmlhttp://www.investorwords.com/8829/annually.htmlhttp://en.wikipedia.org/wiki/Opportunity_costhttp://en.wikipedia.org/wiki/Opportunity_costhttp://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Good_(economics)http://en.wikipedia.org/wiki/Hoardinghttp://en.wikipedia.org/wiki/Real_interest_ratehttp://en.wikipedia.org/wiki/Recessionhttp://en.wikipedia.org/wiki/Commodity_price_indexhttp://en.wikipedia.org/wiki/Producer_price_indexhttp://en.wikipedia.org/wiki/Wholesale_price_indexhttp://en.wikipedia.org/wiki/GDP_deflatorhttp://www.investorwords.com/10595/percentage_increase.htmlhttp://www.investorwords.com/3807/price.htmlhttp://www.investorwords.com/2209/goods.htmlhttp://www.investorwords.com/6664/service.htmlhttp://www.investorwords.com/8829/annually.htmlhttp://en.wikipedia.org/wiki/Opportunity_costhttp://en.wikipedia.org/wiki/Opportunity_costhttp://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Good_(economics)http://en.wikipedia.org/wiki/Hoardinghttp://en.wikipedia.org/wiki/Real_interest_ratehttp://en.wikipedia.org/wiki/Recessionhttp://en.wikipedia.org/wiki/Commodity_price_indexhttp://en.wikipedia.org/wiki/Producer_price_indexhttp://en.wikipedia.org/wiki/Wholesale_price_indexhttp://en.wikipedia.org/wiki/GDP_deflator


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D1/ de5ator J nominal 1D/ S real 1D/


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Effects of Inflation

'n increase in the general level of prices implies a decrease in the

prchasing po+er of the crrency! That is, +hen the general level of prices

rises, each monetary nit "ys fe+er goods and services! The eect of in5ation is not distri"ted evenly in the economy, and as a conse6ence

there are hidden costs to some and "ene8ts to others from this decrease in

the prchasing po+er of money! or e0ample, +ith in5ation, those segments

in society +hich o+n physical assets, sch as property, stock etc!, "ene8t

from the priceSvale of their holdings going p, +hen those +ho seek to

ac6ire them +ill need to pay more for them! Their a"ility to do so +ill

depend on the degree to +hich their income is 80ed! or e0ample, increases

in payments to +orkers and pensioners often lag "ehind in5ation, and for

some people income is 80ed! 'lso, individals or instittions +ith cash

assets +ill e0perience a decline in the prchasing po+er of the cash!

Increases in the price level (in5ation) erode the real vale of money (the

fnctional crrency) and other items +ith an nderlying monetary natre!

.igh or npredicta"le in5ation rates are regarded as harmfl to an

overall economy! They add ineciencies in the market, and make it diclt

for companies to "dget or plan long-term! In5ation can act as a drag on

prodctivity as companies are forced to shift resorces a+ay from prodcts

and services in order to focs on pro8t and losses from crrency in5ation!%@U

3ncertainty a"ot the ftre prchasing po+er of money discoragesinvestment and saving!PHU In5ation can also impose hidden ta0 increases< for

instance in5ated earnings psh ta0payers into higher income ta0 rates

nless the ta0 "rackets are inde0ed to in5ation!

With high in5ation, prchasing po+er is redistri"ted from those on

80ed nominal incomes, sch as some pensioners +hose pensions are not

inde0ed to the price level, to+ards those +ith varia"le incomes +hose

earnings may "etter keep pace +ith the in5ation! %@U This redistri"tion of

prchasing po+er +ill also occr "et+een international trading partners!

Where 80ed e0change rates are imposed, higher in5ation in one economythan another +ill case the 8rst economy7s e0ports to "ecome more

e0pensive and aect the "alance of trade! There can also "e negative

impacts to trade from an increased insta"ility in crrency e0change prices

cased "y npredicta"le in5ation!

http://en.wikipedia.org/wiki/Inflation#cite_note-Taylor-14http://en.wikipedia.org/wiki/Inflation#cite_note-39http://en.wikipedia.org/wiki/Inflation#cite_note-Taylor-14http://en.wikipedia.org/wiki/Exchange_ratehttp://en.wikipedia.org/wiki/Balance_of_tradehttp://en.wikipedia.org/wiki/Inflation#cite_note-Taylor-14http://en.wikipedia.org/wiki/Inflation#cite_note-39http://en.wikipedia.org/wiki/Inflation#cite_note-Taylor-14http://en.wikipedia.org/wiki/Exchange_ratehttp://en.wikipedia.org/wiki/Balance_of_trade


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Ran$ing o countries according to InationData Source: The World Bank Data


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#a,or o"stacles in the way o development

There are many "arriers and diclties in the +ay of economic

development of less developed contries! Development for developing

nations is desira"le "t not achieva"le de to a lot of hrdles! These

o"stacles are groped into the follo+ing 8ve categories *conomic ?"stacles

ocial ?"stacles

2ltral ?"stacles

/olitical ?"stacles and

'dministrative ?"stacles

)conomic -"stacles

De8ciency of capital and foreign e0change

;icios circle of poverty Back+ard natral resorces

Back+ard state technology

In5ation

4o+ /er 2apita Income

Internal and e0ternal de"ts

Dalistic economy

De8cit "alance of payment

.ocial -"stacles

Illiteracy 4o+ living standard

2aste system

3nprodctive e0penditres

2onsmption oriented society

:apidly rising poplation

Cultural -"stacles

2stom and traditions

Wastage of resorces in 4itigation 4o+ participation of +omen

?t 5o+ of the "est "rain

Inecient entreprener

Political -"stacles


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/olitical insta"ility

Insincere leaders

2hanges in 8scal policy

'dministrative -"stacles

2orrption

avoritism and >epotism

4engthy legal process

4a+ and order

is-se of athorities

Concluding remar$s

*conomic development in developing contries is facing a lot of pro"lems!

It is very diclt to remove all these o"stacles "t not impossi"le! 1overnments

of developing and 4D2Ks shold adopt self-reliance policy and adopt modern

technology to remove these complications! Developed contries have

overcome these o"stacles so their economies are gro+ing!

world development indicators1

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