Hi friends, in today’s article we are going to know about the basic indicators of economic development. So let’s discuss in details.
What are the 4 indicators of economic development?
Economic development can be measured with the help of the following factors or indicators –
• Gross National Product – By measuring a nations GNP one can measure the development attained by that nation over a period of time. There are some methods through which one can calculate the GNP and other related factors and thereby compares the data for different periods to draw a conclusion.
However, GNP as the index of economic development is more reliable in case of the development countries. Under developed countries lack in satisfactory indicators and statistical data, which creates same difficulties in the calculations of GNP.
It is found that the GNP figure fails to reveal some important change of the economy which are related to the development like the change and growth of population, the costs to society of environmental pollution, urbanization etc. Therefore, GNP can’t be regarded as a perfect indicator of economic development.
• Per capita Income – An increase in PCI was also used to measure the development of the economy over a long period of time. As defined by Meier, some economists used to define economic development in terms of PCI.
But the some difficulties arised here also as it was in case of GNP. An increase in PCI may not raise the standard of living of the people of the society. Therefore, the index of PCI is also rejected by the modern economists.
• Welfare – According to some economists economic development can be measured with the help of a sustained, secular important in material welfare in the society. This therefore reflects in the incensement of goods and services in the society.
However, welfare index is also not free from limitations as it is really difficult to take the valuation of the output because output may valued at market prices whereas economic welfare is measured by an increase in real national income. Besides it is very difficult to make value judgements regarding individual welfare and social welfare as a whole.
• Social Indicators – Social indicators includes health, food education including literacy and skills employment conditions, infrastructural facilities, social security, etc. as the index of measuring economic development. These indicators are associated with the quality of development process.
Therefore most economists agree that an index of development based on a good number of socio-economic indicator provides a more accurate measure of social and personal welfare than per capita national income.
However, problem also arises in constructing a common index of development relating to these indicators. Some indicators suffer from conceptual problem also.
Some social indicators are concerned with current welfare and are not related to the future. Again the social indicators involve value judgements.
It is revealed that economic development is measured different ways and indicator are taken by the economists in accordance with their convenience.
However, there is a broad agreement as those indicators of development, but one can always think of some more indicators of welfare to make the list more comprehensive.
Conclusion
So friends, this was the major indicators of economic development. Hope you get the full details about it and hope you like this article.
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