Measurements of Economic Development Given, that the concept of development is related to personal
and community welfare, agreement on the various dimensions of welfare is necessary so as to make measurement possible.
Some of the indicators of welfares include: consumption levels, equity in distribution of income and wealth, literacy rate, health and employment. Since there are both economic and non-economic aspects of
development, attempts are made to generate single indices of development, combining social, political and economic indicators.
Some of the indicators of welfare include:
•Cross National product (GNP) per capita: This refers to the income of a country divided by the population. This measure ahs the advantage of ease of calculation and ease of comparison. Most countries compile statistics on gross domestic product on an annual basis and data on population every ten years, making it easily to compute. However the measure has a number problems which make it rather abstract when comparing development levels between countries. One of the problems is it does not consider the distribution of income in the country. The figures are merely generalisations rather than a concise indication of the economic/social status of each individual in the country.
• Secondly, the GNP per capita only considers market values.
• In addition, this measure does not reflect the cost of environmental degradation, and indeed it does not reveal the degree of industrialisation and urbanisation, plus their associated costs
• Finally the GNP per capita does not adequately consider the purchasing proven of the people in the country. For instance a dollar spent in Uganda may give a higher utility than a dollar spent in the U.S.A.
Because of the limitations of the GNP per capita as a measure of economic development, other more elaborate measures have been suggested. These include the share of industry in total output, per capita
expenditure and the share of food expenditure in total expenditure.
Written by:
A.B. Kintu B.Com (Hons) Marketing Makerere University (2007)