Methods for Measuring Economic Development PDF

Summary

This document discusses methods for measuring economic development, focusing on the Physical Quality of Life Index (PQLI) and the Human Development Index (HDI). It explains the components of each index and their limitations. The document also provides an overview of India's performance in these indicators.

Full Transcript

Methods for Measuring Economic Development 1. Physical Quality of Life Index (PQLI): In 1979, D. Morris constructed a composite Physical Quality of Life Index (PQLI). He found that most of the indicators were inputs to development process rather than result of the development process. These indicato...

Methods for Measuring Economic Development 1. Physical Quality of Life Index (PQLI): In 1979, D. Morris constructed a composite Physical Quality of Life Index (PQLI). He found that most of the indicators were inputs to development process rather than result of the development process. These indicators reflected that economically less developed countries are simply underdeveloped versions of industrialized countries. He therefore, combines three component indicators of Infant Mortality, Life Expectancy and Basic Literacy to measure performance in meeting the basic needs of the people. Drawbacks of PQLI It ignores many factors which influence the quality of life such as employment, housing, justice, social security etc. It is a simple average of literacy rate, infant mortality rate and life expectancy, i.e. all the factors have been given equal weightage. However, it is difficult to understand the rationale behind giving equal importance to all factors. It doesn’t explain the structural change in the economy of a country. 2. Human Development Index (HDI): Considering quality of Life Index, the United Nations was the first to prepare and publish Human Development Index in the year 1990. Human Development Index studies the following three basic human aspects: (i) Living a long life or Longevity (LEI) (ii) Being knowledgeable on Educational Attainment (Index EAI). (iii) Standard of living on Real per capita GDP (SLI). These three indices can be expressed as HDI = (1/3) (LEI + EAI + SLI) i) Longevity (LEF): Longevity means life expectancy at birth. It refers to the number of years a newly born baby is expected to live. Life expectancy in India at present is 63 years. (ii) Educational Attainment (EAI): It means education attained by the people of the country on an average basis. The constituents of educational attainment are expressed through the following two variables: (а) Adult literacy rate (ALR) (b) Gross enrolment ratio (GER) (a) Adult Literacy Rate (ALR): The rate or the percentage of people aged 15 and above who can understand, read and write a short and simple statement in their everyday life are known as literate. It implies that every literate must be capable of reading and writing certain sentences. If someone is able to sign but not capable of reading and writing simple statement is not literate. Thus, capability of reading only or writing only does not make a person literate. Literacy is the symbol of the quality of the people. (b) Gross Enrolment Ratio (GER): Gross Enrolment Ratio refers to the number of students enrolled at different levels of education. It is the percentage of population of different age groups engaged in educational pursuit. The education level consists of primary, secondary and tertiary level. Basic elements of education are provided at primary level. Secondary level education is studied at middle and secondary level. University level education is studied under tertiary level. General enrolment ratio shows the percentage population enrolled at primary, middle, secondary and university level. The higher GER indicates higher quality of life. It will be the sincere effort of every economy to increase general enrolment ratio as far as possible. (iii) Real GDP Per Capita or Standard of Living (SLI): It is considered as a measure of the standard of living of the people of a country. In order to calculate human development index we are required to study and analyse longevity, educational attainment and real GDP per capita. According to the 2023-24 Human Development Report (HDR), titled ‘Breaking the Gridlock: Reimagining Cooperation in a Polarised World,’ India ranks 134 on the global Human Development Index (HDI). Switzerland has been ranked number one. Indian Overview: o Performance at Various Indicators: India’s average life expectancy reached 67.7 years in 2022, up from 62.7 years the previous year. India’s Gross National Income (GNI) per capita has surged to USD 6951, marking a 6.3% increase over the span of 12 months. There is a rise in expected years of schooling, reaching 12.6 per individual. o HDI Score: India attained an HDI score of 0.644 in 2022, positioning it at 134 out of 193 countries in the UN’s 2023-24 report. This categorises India under ‘medium human development.’ With India’s HDI in 1990 standing at 0.434, the 2022 score reflects a positive change of 48.4%. o Notable Achievements: There is a 9.1-year increase in life expectancy at birth, a rise of 4.6 years in expected years of schooling, and an increase of 3.8 years in mean years of schooling.

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