Indicators of economic development:
1. GNP per capita:
GNP per capita is defined as the total value of all the goods and services produced by a country in a year including income from foreign investments, divided by the number of people living there.
For countries which have a lot of foreign investments, GNP per capita is a more accurate economic indicator of economic development.
2. GDP per capita:
GDP per capita is the most common indicator of material standards of living and hence is included in the index of development. GDP per capita is found by measuring Gross Domestic Product in a year and dividing it by the population.
3. Human Development Index (HDI):
HDI is a very useful means of comparing the level of development of countries. GDP per capita alone is clearly too narrow as an indicator of economic development and fails to indicate other aspects of development, such as enrollment in school and longevity. Hence, the HDI is a broader and more encompassing indicator of development than GDP, though GDP still provides one-third of the index.
HDI has a scale from 0 (no development) to 1 (complete development), where;
- An index of 0 – 0.49 means low development – for example, Nigeria was 0.42 in 2010.
- An index of 0.5 – 0.69 means medium development – for example, Indonesia was 0.6
- An index of 0.7 to 0.79 means high development – for example, Romania was 0.76
- Above 0.8 means very high development – Finland was 0.87 in 2010.
4. Physical Quality of Life Index (PQLI):
The Physical Quality of Life Index (PQLI) is an attempt to measure the quality of life or well-being of a country. The value is the average of three statistics: basic literacy rate, infant mortality, and life expectancy at age one, all equally weighted on a 0 to 100 scale.
It was developed for the Overseas Development Council in the mid-1970s by Morris David Morris, as one of a number of measures created due to dissatisfaction with the use of GNP as an indicator of development.