3. Why is per-capita income called the ideal indicator of economic development?
Answers
Answer:
Per capita income is national income divided by population size. Per capita income is often used to measure a sector's average income and compare the wealth of different populations. Per capita income is also often used to measure a country's standard of living. This helps to ascertain a country's development status
Answer:
Per Capita Income as a Growth Indicator :
Dividing GDP/GNP by the total population one gets per capita GDP/GNP. Conventionally, per capita income is used as an index of development. Economic development involves something more than economic growth. Economic development emphasises on the qualitative aspects of economic expansion processes.
Anyway, this view says that increases in per capita income over a long period of time are suggestive of economic development. Greater the income, higher the standard of living of people, and lower the incidence of poverty and inequality. The only thing that has to be taken into account is that the growth rate of per capita income should exceed the country’s population growth—to have more growth and development.
However, the reality is not so simple as it has ‘been painted here. Although there may be a positive association between high income and higher level of development and between low income and a state of un-development, there are many reasons that suggest per capita income is not an acceptable criterion of development.
Explanation:
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