A country’s development is measured by per capita income, gross domestic product (GDP), real income and gross national product (GNP) indicators. Economic development is the process of improving the people’s standard of living and well-being in an economy. It goes beyond the expansion of people’s capabilities. It increases income per capita over time, often associated with economic growth, and thus, it also includes the country’s poverty reduction and income redistribution. In developing countries, the annual gross domestic product represents the value of all the goods and services produced over a specific period within a country’s borders. GDP tracks the health of a country’s economy. Common indicators focus on the difference between qualitative and quantitative approaches.

 Measuring development always requires the following common indicators: (a) gross domestic product (GDP), (b) gross national product (GNP), and (c) New human development index (NHDI). NHDI measures economic development by looking at the following factors, (1) birth rates, (2) death rates, (3) infant mortality rates, (4) literacy rates, and (4) life expectancy rates. These common indicators determine the economic well-being and standard of living of the people in a particular country. Todaro and Smith (2015) state that purchasing power parity is the number of units of a foreign country’s currency required to buy an identical quantity of products and services in a local developing market as one dollar would purchase in the United States. Purchasing power parity evaluates the exchange rate.

GDP and GNP

Most developing countries have issues consolidating and determining the strength of their GDP and GNP because they lack sustainable knowledge and skills using available indicators to evaluate economic growth. GDP is the total market value of all finished goods and services produced within a country for a particular year. Determining a country’s overall productivity level is challenging without the correct GDP. The GDP indicates whether a country can produce enough products for its economy. GDP evaluates the economy using per capita income, the income earned by the individuals in the economy.

According to Todaro and Smith (2015), it goes beyond the population know-how and provides significant insights into the capabilities. In developed countries, most of their GDPs are well predicted from the national and by economists who keep tracking the trends progress from week to week and month to month basis to read how the indicator would foresee the overall results of the economic growth through employment, prices, investment and national savings. If these factors gradually grow consistently, the economy will be healthy and moving in the right direction.

In developing countries, the knowledge and skills to read the economic movement are well below the standard of countries where their population is literate. The population’s literacy shows that most societies produce considerable goods and services associated with a living standard and better economic growth. The GNP represents an enormous part of a country’s total income from goods and services often produced by domestic citizens, foreign residents, and businesses (Todaro and Smith. 2015). The qualitative and quantitative approaches differ in many aspects of human life as each approach evaluates the situation based on practical research about the ideas and the numerical evidence.

The data collection determines the logical economic growth scenarios in all developing countries. In the developing world, each country has experienced different challenges its population endure regarding economic development. Some developing countries have high birth and death rates and low life expectancy rates. The populations face many challenges of food shortage, lack of clean drinking water, shelter, health and poor education. These factors contribute to high infant mortality during and after birth because there are low numbers of doctors, nurses and paramedic assistants.

Sen’s capability approach

Walker and Unterhalter (2007) stressed that Sen’s capability approach is defined as the individual’s or a person’s ability to reach valuable economic freedom and equality. It determines what a person can do to promote willingness to create maximum opportunities and achieve positive outcomes. In developing countries, the idea features how a particular country measures economic production. Sen’s approach underscores the number of reasons that define capability, including the claim that the freedom to achieve well-being should be the primary moral importance and that well-being can be recognized in the individual’s capability and functioning.

It expresses the lack of equal opportunity in economic development. When people cannot participate in economic well-being, it shows that there is a problem in making valuable achievements, and therefore, requires more attention from an education perspective. Todaro and Smith (2015), Sen claims that poverty would not be measured by income but by what a person can do to achieve freedom of choice. Thus, Sen’s capability approach has made a significant difference in developing countries by promoting and educating underdeveloped countries on how to work hard to improve their economic growth.

New Human development index (NHDI)

United Nations reports provide essential records about human development in developed and developing countries, entailing the new human development index that thoroughly explains the challenges and lack of human development in several low-income countries. The reports state that the economic development concept evolved around the new human development index, which continuously measures the achievement in human development by examining some key dimensions.

The new human development index has dimensions and indicators, including a long and healthy life, knowledge and skills, and a decent standard of living. Most developing countries experience consistently higher infant mortality rates than their peers because of poor government and flawed public and private institutions.

In contrast, indicators include the life expectancy at birth and expected years of schooling – the number of years in schooling and gross national income, GNI per capita (UNDP, 2022). If developing countries have achieved to maintain such human development, the level of economic growth will improve. After all, these indicators help analyze economic health as a stable and healthy economy typically attracts foreign investment and businesses that lead to high economic growth. Using these indicators in a broader perspective could help improve citizens’ living standards, reduce infant mortality, and increase the life span expectancy of citizens, and therefore, promote health workers capable to add-value into economic growth.

According to the UNDP reports, the quality and quantity of human development need significant technical measures to prevent and promote the economic well-being of citizens in developing countries. The new human development index (NHDI) typically ranks countries based on indices performance with high, medium and low levels of their human development. Human development looks at the population regarding the capabilities that such a population can achieve regarding economic growth and income per capita, which always determines by the contribution each person can produce at the level of economic activities in a country.

Also, household income is another measurement that can estimate the average income in developing countries. The measurement predicts whether the income earned by an individual supports the standard of living. Thus, the new human development index helps evaluate the overall economic health of developed and developing countries through NHDI.

Conclusion

As discussed in this paper, development is measured through a consistent path of human development. Measuring development depends on economic indicators used to evaluate the economic health of developing countries. These economic indicators include gross domestic product (GDP), real income and gross national product (GNP). Economic health is evaluated based on economic growth, high employment level and economic stability. High employment level and economic stability determine by the GDP and GNP. Each indicator is utilized to analyze economic development.

In developing countries, human development considers lower because of many reasons that affect the development progress. These many reasons include sectarians motivated by ethnicity, religion, race, color, rich and poor. The government institutions are controlled by those in power, contributing to the slow growth of human development in developing countries. For instance, human development is prolonged in countries that do not have authentic governments, such as South Sudan.

These governments are weak in controlling and promoting unbiased institutions to implement the rules of law to protect the population and seek support from developed countries for human development. Human development challenges need improvement so that human predicament situations will change in developing countries. Grabowski, Self and Shields (2003) infer that economic development is traditionally equated with economic growth because the measurement of human development determines them through GDP per capita, which stimulates the market values of goods and services produced in an economy in a year.

According to the UNDP reports (2021-2022), some developing countries have gradually improved, and others are doing poorly because of low human development, primarily in part of gender equality. Gender equality has been a significant challenge in some developing countries. The education level of women tends to be lower than men, which can prevent diversity in the economic development of most developing countries. Therefore, Sen’s capability approach is not well applied in areas of need in developing countries. 

References

Todaro, M. P. and Smith, S. C. (2015). Economic development (12th ed.). Published by Addison-Wesley Longman, Inc.

Walker, M. and Unterhalter, E. (2007). Amartya Sen’s capability approach and social justice in education. Palgrave Macmillan. https://ebookcentral.proquest.com/lib/.

United Nations Development Programme (UNDP). (2021-2022). Uncertain times, unsettled lives: Shaping our future in a transforming world. https://hdr.undp.org/data-center/human-development-index#/indicies/HDI.

Grabowski, R., Self, S. and Shields, M. P. (2003). Economic development: A regional, institutional, and historical approach. M.E. Sharpe Incorporate.

https://ebookcentral.proquest.com/lib/cochristuniv-ebooks/reader.action?docID=302426.