There are three aspects of development, and we can use these aspects of development to measure how developed a country is, and then we call these aspects of development indicators of development. In other words, usually a numerical measure of quality of life in a country. Indicators are used to illustrate progress of a country in meeting a range of economic, social, and environmental goals.
Today we will be looking at the three main indicators of development and a few things that go along with each one of them.
First up, we have the Economic or Physical Well-Being Indicator of development. Within this indicator of development, I will be talking about,
- GDP
- GDP Per Capita
- Purchasing Power Parity (PPP)
GDP stands for gross domestic product. Basically, the definition of GDP or gross domestic product is the value of goods and services that are produced within a country in one year. And this sounds straightforward, but what does it actually mean? So in a country, whenever a finished product is sold, it is counted towards that country's GDP, for example, let's think of the United States of America, every laptop that they make and manufacture in America that is sold to American citizens is counted towards America's GDP. But even if I bought a laptop from the United States of America, that money would still be counted towards their GDP, because that's where the product was made. So when we are importing goods from other countries, we are contributing to their GDP. And when other people buy products from our country, they are contributing to our GDP. Essentially, the value of all of these goods is added up, and we can see what the GDP is for that year in a specific country. Bangladesh's GDP is estimated to be $2.013 trillion dollars by World Economics for 2023.
It is important to note that GDP and GDP per capita, which we're going to do next, is all represented in US dollars. This just standardizes everything for all countries and makes it easier to draw comparisons.
GDP per Capita, The second way of determining the economic development of a country is looking at that country's GDP per capita. The term per capita essentially means per person. Now we just learned what GDP is. So GDP per capita basically just means that if we were to divide the entire GDP amongst the population, what would each person get?
GDP per capita is measured in US dollars, so our unit over the formula and GDP per capita needs to be US dollars. It is just an indication of how well a country is doing economically in general, the higher the GDP per capita, the more developed that country is. According to IMF (International Monetary Fund) the GDP per capita of Bangladesh in 2024 is 2.65 thousand US dollars, where it is 85.37 thousand US dollars for United States.
The third concept under the economic indicator of development is the term called Purchasing Power Parity, Which is basically the money that would be needed to purchase the same product in different countries. For example, a dress. This exact same dress could exist in the United States of America. This exact same dress could exist in Bangladesh. It exists here in Germany. So basically, how much money would I have to spend on this dress in Germany? How much money would I have to spend on this dress in America, and how much money would I have to spend on this dress in Bangladesh?
That is purchasing power parity, and The Economist likes to call this the Big Mac Index. The Big Mac index helps us determine whether currencies across different countries are at a correct level in an informal way. We are taking the same product, and comparing how much money we would need across different countries to purchase that exact same product. For example, a Big Mac (a hamburger sold by the international fast food restaurant chain McDonald's) in America could be $2 whereas that exact same Big Mac could be $4 in Japan, it is the same product, but the purchasing power of different currencies means that the same product is going to be worth different values in different countries.
Let's move on to social indicators of development. Remember, with social indicators of development, we are looking at the general welfare of that community. We are looking at their quality of life and their well being. How healthy are they? How safe are they? How happy are they?
Three common Social or Productive Well-Being Indicator of development are
· life expectancy
· Infant mortality
· Literacy rate.
Life Expectancy refers to the average age people in a certain country can expect to reach. Now remember, life expectancy is an average. A general trend is that people in LEDCs or less economically developed countries have a lower life expectancy, whereas people in MEDCs or more economically developed countries have a higher life expectancy. Often, life expectancy is tied to the quality of medical care in each country. Places with a higher life expectancy generally have better healthcare facilities, whereas places with lower life expectancy generally have poorer healthcare facilities.
Infant mortality refers to the number of babies per 1000 live births that die within their first year of life or at birth again, this is often linked to healthcare facilities. Places with a high infant mortality rate, meaning that more babies die, generally have poorer healthcare facilities, whereas places with a lower infant mortality rate, meaning that fewer babies die, generally have better healthcare facilities.
The third social indicator of development is literacy rate. Education is a very good indicator in terms of seeing how developed a country is. Literacy rate refers to the percentage of the population who are over the age of 15, who can read and write. MEDCs generally have a higher literacy rate, whereas LEDCs generally have a lower literacy rate.
The third and final indicator of development that we'll be talking about today is the Environmental Indicator of development. People depend on natural resources and the environment to become wealthy and to live a comfortable life. Earth's population is growing very rapidly. More people means that more resources are going to be depleted, and this ultimately causes more damage to the environment. Some examples of environmental indicators are the percentage of polluting gasses in the atmosphere, a drop in fish stocks in the oceans, looking at the quality of water in rivers and lakes, looking at how many non-renewable resources were used. All of these things give us an indication as to how quickly our resources are being depleted.
We may have thought that countries who are doing very well economically and socially must be top ranked in terms of development, but often development comes at the expense of the environment. We cannot truly say that a country is well developed if the environment is so damaged, even if a country has the highest GDP and amazing social indicators of development.
If they have used up all of their natural resources and caused such damage to the environment, can we truly say that they are well developed? Should we need to consider environmental impact in development metrics? Let me know your thoughts in the comments below.
Recap and Conclusion: So today we looked at three indicators of developments,
- The three indicators of development: economic, social, and environmental.
- Economic indicators include GDP, GDP per capita, and PPP.
- Social indicators are life expectancy, infant mortality, and literacy rate.
- Environmental indicators measure resource depletion and environmental impact.
Reference
https://www.worldeconomics.com/Country-Size/Bangladesh.aspx
https://www.imf.org/external/datamapper/NGDPDPC@WEO/IND/BGD
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