Defining Development » Measuring Development

Why do we measure development?

In What Is Development? you saw that development can be defined using money or using broader social and political measures. To compare countries fairly, geographers use numbers. The specification names four ways to measure development: GDP per capita, the Human Development Index, measures of inequality and indices of political corruption.

Key terms:

• Indicator: a piece of data used to show how developed a country is.
• Single index: a measure that uses just one piece of data, such as income per person.
• Composite index: a measure that combines several pieces of data into one score.
• GDP per capita: the total value of goods and services a country produces in a year, divided by its population.
• Human Development Index (HDI): a composite index that combines health, education and income into one score between 0 and 1.
• Inequality: the gap between richer and poorer people in a country.
• Gini coefficient: a measure of how unequally income is shared in a country.
• Corruption: using a position of power to gain money or advantages in a dishonest way.

GDP per capita: a single index

Gross Domestic Product (GDP) is the total value of everything a country produces in a year. A big country will usually have a big GDP, so we divide it by the number of people. This gives GDP per capita, the average amount produced per person. It is often given in US dollars so that countries can be compared.

GDP per capita is simple and easy to find for almost every country. A higher figure usually means more money to spend on hospitals, schools and roads. But it is only an average. It does not show who gets the money, and it says nothing about health, education or freedom.

The Human Development Index: a composite index

The Human Development Index (HDI) is produced by the United Nations Development Programme. It is a composite index because it combines three things into one score:

The score runs from 0 to 1. The closer to 1, the higher the level of human development. Countries are then ranked from the highest score to the lowest.

The HDI covers more of human welfare than GDP per capita. Two countries with similar incomes can have very different HDI scores if one spends more on schools and health care.

Measures of inequality

An average can hide big gaps. In one country a few people may be very rich while most are poor. Measures of inequality show this.

The Gini coefficient is one example. A score of 0 means everyone has exactly the same income. A score of 100 (or 1, if given as a decimal) means one person has all the income. So the lower the score, the more equal the country.

The Gini coefficient does not show how rich a country is. A poor country can be quite equal, and a rich country can be very unequal.

Indices of political corruption

Corruption holds back development because money meant for hospitals, schools and roads can end up in the wrong hands. It can also put off businesses from investing. Corruption is hidden, so it is hard to count directly.

One well-known index is Transparency International's Corruption Perceptions Index. It scores countries from 0 (highly corrupt) to 100 (very clean), based on how corrupt experts and business people believe the public sector to be. Notice that these are perceptions, not exact counts, and a higher score is better.

Comparing countries using the data

Here is invented data for four countries. Use it to practise ranking.

• Aldoria: GDP per capita $55,000; HDI 0.94; Gini 30; corruption score 82
• Brenmark: GDP per capita $20,000; HDI 0.74; Gini 52; corruption score 35
• Corvania: GDP per capita $12,000; HDI 0.79; Gini 33; corruption score 60
• Delmora: GDP per capita $3,000; HDI 0.52; Gini 41; corruption score 28

Corvania and Brenmark swap places. Brenmark earns more per person, but Corvania scores higher on the HDI, so its people probably have better health and education for their income. The other data helps to explain why. Brenmark is much more unequal (Gini 52 against 33) and has a lower corruption score (35 against 60), so its wealth may not reach ordinary people.

Notice too that Aldoria ranks first on every measure. On Gini the lowest number is best, so check which way a scale works before ranking.

Strengths and weaknesses

• GDP per capita: simple and widely available, but an average that hides inequality and ignores welfare.
• HDI: includes health, education and income, but still leaves out things such as political freedom.
• Gini coefficient: shows how fairly income is shared, but not how high incomes are.
• Corruption index: shows honesty in government, but is based on opinion.

No single measure tells the whole story, so geographers use several together.

Exam-style question

Use the data above on Brenmark and Corvania.

(a) State which country has the higher HDI. [1 mark]

(b) Explain why the HDI is a composite index. [2 marks]

(c) Suggest why Brenmark has a higher GDP per capita than Corvania but a lower HDI. [3 marks]