Economics 310
0 – 0.49 means low development
Production - usually measured by GNP or GNI. 0.5 – 0.69 means medium development
0.7 to 0.79 means high development
Growth - a vital and necessary condition for Above 0.8 means very high development
development, but it is not a sufficient condition as it
cannot guarantee development.
Longevity, measured by life expectancy at birth
National income accounting refers to the government
bookkeeping system thatmeasures the health of an Knowledge, measured by adult literacy
economy, projected growth, economic activity, and
development during a certain period of time. Standard of living, measured by real GDP per
capita at purchasing power parity
Gross Domestic Product (GDP) - the cumulative value
of products and services generated in an economy
over a given period of time. Development is a process of disproportionate growth of
systems.
Gross National Product (GNP) measures the total
monetary value of the output produced by a country's Economic development is a process that generates
residents. ( any output produced by foreign residents economic, social and technical progress of nations.
within the country's
Borders must be excluded in calculations of GNP, goal of economic development in its simplest form is
while any output produced by the country's residents to create the wealth of a nation.
outside of its borders must be counted.)
Net national income (NNI) is defined as gross national GNI as the sum of value added by all resident
income minus the depreciation of fixed capital assets producers plus any product taxes (less subsidies) not
through wear and tear and obsolescence. included in the valuation of output plus net receipts of
primary income (compensation of employees and
Market Value - value that the measures of national property income) from abroad.
income and output assign to a good or service
Sustainable Development - “progress that meets the
product method looks at the economy on an needs of the present without compromising the ability of
industry-by-industry basis. future generations to meet their own needs”
Millennium Development Goals (MDGs)
expenditure method is based on the idea that
all products are bought by somebody or some • poverty and hunger,
organization. • primary universal education,
• gender equality,
income method works by summing the incomes • child health,
of all producers within the boundary. • maternal health,
• HIV/AIDS,
Indicators of Development … Per Capita Income , Life • environmental sustainability and global partnership.
Expectancy, Education, Extent of Poverty
The “invisible hand” doctrine has become the
foundation for the working of the market economy or
GDP per capita is the commonest indicator of material capitalism .
standards of living, and hence is included in the index of
development. Rostow’s Stage of Economic Growth
Adult Literacy -The percentage of those aged 15 and Tradional Society
above who are able to read and write a simple statement Preconditional for take off
on their everyday life. Take off
Drive of Maturity
HDI was created to emphasize that people and their Age of Mass Consumption
capabilities should be the ultimate criteria for assessing
the development of a country, not economic growth new growth theory emphasizes that economic growth
alone. results from increasing returns to the use of knowledge
A scale from 0 (no development) to 1 (complete rather than labour and capital.
development).
“big push”—a public-led massive investment program
1. Human Capital Development
Coccia, 2015 - “The global and industrial society, 2. Innovation and Technological Advancement
driven by new technology, is generating economic 3. Increased Productivity
growth rather than a sustainable development of nations.” 4. Social Mobility and Economic Inequalities
5. Strengthening Institutions and Governance
Economic growth is as an increase in Gross Domestic
Product (GDP), either in total GDP or in GDP per capita.
GINI Coefficient - most common measure of income
inequality 0 being perfect equality (all have the same
income) and 1 being perfect inequality (all income
earned by one person).
Five Capital Appproach
1. Natural Capital - naturals resource stocks
2. Human Capital - skills , knowledge , labour
3. Economic / Financial Capital - capital base
4. Physical Capital - infrastructure
5. Social Capital - Social resources like networks
Total Poverty Gap (TPG) measures the total amount of
income necessary to lift everyone
below the PL to that line.
Human capital is an intangible asset or quality not
listed on a company's balance sheet.
Human Resource Department department oversees
workforce acquisition, management, and
optimization.
ROI = company’s total profits by its overall
investments in human capital.
Economists Gary Becker & Theodore Schultz
formalized the term, viewing human capital as an
investment in skills and productivity.
Opportunity Cost: Education delays workforce entry
and sacrifices immediate wages in exchange for higher
future earnings.
Investment Trade-Off: Individuals reduce present
consumption to invest in education, expecting long-term
income growth.
Economic Impact: Higher education leads to higher
wages; wage gaps between educated and less-educated
workers are increasing, especially in developing
countries.
Diminishing Returns: Additional education increases
future earnings, but each extra investment provides a
smaller return
over time.
Education is a cornerstone of economic prosperity,
driving growth through multiple channels:
