how can we measure the economic development of a country..? Explain.
Answers
Answer:
Economic development of a country can be measured by its per capita income, literacy rate, health status, infant mortality rate and life expectancy of persons living in that country.
Explanation:
Answer:
1. National Income as an Index of Development:
There is a group of certain economists which maintains the growth of national income should be considered most suitable index of economic development. They are Simon Kuznets, Meier and Baldwin, Hicks D. Samuelson, Pigon and Kuznets who favored this method as a basis for measuring economic development. For this purpose, net national product (NNP) is preferred to gross national product (GNP) as it gives a better idea about the progress of a nation.
According to Prof. Meier and Baldwin, “If an increase in per capita income is taken as the measure of economic development, we would be in the awkward position of having to say that a country had not developed if its real national income, had risen but population had also risen at the same rate.”
Similarly, Prof. Me de maintains that, “Total income is a more appropriate concept to measure welfare than income per capita.” Therefore, in measurable economic development, the most appropriate measure will be to include final goods and services produced but we must allow for the wastage of machinery and other capital goods during the process of production.
Arguments in Favour of National Income:
There are certain arguments for stressing real national income as a measurement of economic development.
They are:
(i) A larger real national income is normally a pre-requisite for an increase in real per capita income and hence, a rising national income can be taken as a token of economic development.
(ii) If per capita income is used for measuring economic development, the population problem may be concealed, since population has already been divided out. In this context, Prof. Simon Kuznets writes, “The choice of per capita, per unit or any similar measure to gauge the rate of economic growth carried with it danger of neglecting the denominator of the ratio.”
(iii) If an increase in per capita income is taken as the measure of economic development, we are likely to be put in an awkward situation of saying that a country has not developed if its real national income has increased but its population has also increased at the same rate.
Explanation: