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Measuring Development

Introducing the Topic

Introduction to Measuring and Assessing Development

Traditional development measures, such as Gross Domestic Product (GDP), have long been used to gauge a state's economic progress. While GDP provides valuable insight into the economic output of a state, it falls short of capturing the full picture of human well-being and sustainability. In this section, we will explore a variety of alternative development indices that offer a more comprehensive view. For example, indices like the Social Progress Index, Environmental Performance Index, Genuine Progress Indicator and Happy Planet Index offer a more nuanced perspective on what it means to develop. 

Prescribed TopicPrescribed Content

Nature, practice and study of development and sustainability

Assessment of development

Activiating

Watch the following introductory video to measuring development and answer the guiding questions that follow.

Guiding Questions

  1. What is GDP per capita?
  2. Why are the following needed for a high GDP:
    • peace and stability
    • quality education
    • access to capital
    • rule of law
    • equality of opportunity
  3. What are three reasons one country might help another country, i.e. help other countries with their development?
 Teacher only box

Here are some possible answers to the guiding questions: 

1. What is GDP per capita? GDP per capita measures a country's average economic output per person. It is calculated by dividing the total value of all goods and services produced within a country (GDP) by the number of people living there. This metric helps to compare the economic performance and standard of living of different countries.

2. Why are the following needed for a high GDP:

  • Peace and stability: Peace and stability are essential for a high GDP because they allow people to work regularly and contribute to the economy without disrupting conflict or insecurity. When people can focus on their jobs and businesses can operate without fear of violence, economic activities flourish, leading to sustained economic growth.
  • Quality education: Quality education is crucial for a high GDP because it equips people with the skills and knowledge needed to be productive workers and innovative thinkers. Educated individuals can perform more complex tasks, contribute to technological advancements, and be more effective consumers, all of which drive economic growth.
  • Access to capital: Access to capital is necessary for a high GDP because it allows individuals and businesses to invest in new ventures and expand existing ones. Capital is required to start businesses, develop industries, and implement innovations, creating jobs, increasing productivity, and boosting economic growth.
  • Rule of law: The rule of law is important for a high GDP because it ensures that government officials and citizens adhere to a legal framework that promotes fairness and protects property rights. When people are confident that their assets and earnings are secure, they are more likely to invest and engage in economic activities, which spurs growth.
  • Equality of opportunity: Equality of opportunity is needed for a high GDP because it allows all individuals to contribute to the economy regardless of their background. When discrimination is eliminated and everyone has equal access to education, jobs, and markets, the full potential of the population is unleashed, leading to greater innovation and economic performance.

3. What are three reasons why one country might help another country with their development?

  • Some governments view helping other countries as the right thing to do, driven by a sense of moral obligation to assist fellow humans in improving their quality of life.
  • By helping other countries develop economically, a country can reduce the risk of conflict and instability that could spill over borders. Prosperous nations are less likely to harbour terrorist groups or criminal organizations, enhancing global security.
  • Helping other countries develop can create new trade partners and investment opportunities. As other countries become more prosperous, they can engage in more substantial trade and economic exchanges, benefiting both parties.

Lesson Content

As mentioned, traditional metrics like GDP often dominate the conversation when measuring or assessing development. However, Jason Hickel writes in the New Internationalist that:

"GDP does not account for the goods and services that people derive from subsistence activities and from commons: game and fodder from communal forests, water from communal irrigation systems, chickens and vegetables raised for domestic consumption, gifts from neighbours, and so on – all of which are normally included in surveys that measure poverty ... If you enclose a forest and sell it for timber, GDP goes up. If you burn subsistence farms and turn the land into cotton plantations, GDP goes up. But this accounting tells us nothing of what local communities lose in terms of their use of that forest or their access to food. The costs to their livelihoods and wellbeing is swept under the statistical rug. For these reasons, GDP is not a legitimate proxy for measuring poverty – particularly not during an era characterized by enclosure and dispossession."

The Guardian article "It's time to retire metrics like GDP. They don't measure everything that matters" also explores these limitations and discusses alternative metrics that provide a more comprehensive view of development. By incorporating measures of social progress and sustainability, we can better understand and promote true development that benefits all aspects of society.

Read the article and summarize Stiglitz's rationale for why "it is time to retire metrics like GDP."

 Teacher only box

Here are the key items students should have focused their summary on: 

  • GDP and other standard economic metrics failed to predict or adequately warn policymakers about financial crises.
  • GDP does not account for environmental degradation or the depletion of natural resources. This omission leads to an overly optimistic view of economic health, ignoring the unsustainability of growth that damages the environment.
  • GDP increases do not reflect the distribution of wealth within a society. Stiglitz points out that even when GDP rises, if the top 1% disproportionately captures the gains, most citizens may not see any improvement in their living standards.
  • Standard economic metrics do not adequately reflect the social impacts of economic policies. For example, GDP does not show the full extent of suffering caused by austerity measures or long-term effects on living standards.
  • Criticizes the false trade-off suggested by GDP metrics, which implies that policies improving economic security (like pensions or welfare) necessarily come at the cost of national economic performance.

Extending Your Learning: To explore questions related to GDP and the poverty line further, read Jason Hickel's full article, "Progress and Its Discontents."

Applying Your Knowledge / Global Politics in Action / Checking for Understanding

As you will have learned, there is more than one way to think about and measure what it means to be developed. As an introduction to your inquiry for this topic, watch former Scottish First Minister Nicola Sturgeon's TED Talk on the Wellbeing Index and answer the following guiding questions.

Guiding Questions

  1. What is the importance of how we measure success?
  2. What does GDP neglect to consider in its calculations?
  3. What are some of the areas that Sturgeon argues need to be considered as part of Scotland's National Performance Framework?
  4. What is an interesting point that Sturgeon makes about the work that Iceland, Scotland and New Zealand do to promote well-being? Check out the Wellbeing Economy Alliance.
  5. What does Sturgeon argue should be at the heart of our vision of society?

If you would like to hear a little more about why economists are rejecting GDP as an indicator of development, check out this TED Talk.

 Teacher only box

These are some possible answers to the guiding questions for the video:

  1. What is the importance of how we measure success? Measuring success determines political focus and public activity, influencing what society values and prioritizes. It shapes policies and drives national goals, impacting overall well-being and development.
  2. What does GDP neglect to consider in its calculations? GDP neglects factors such as unpaid care work, environmental sustainability, the nature of work (whether it is fulfilling or not), and social well-being. It also does not account for income inequality and the negative externalities of economic activities.
  3. What are some of the areas that Sturgeon argues need to be considered as part of Scotland's National Performance Framework? Sturgeon argues that the National Performance Framework should include indicators such as income inequality, child happiness, access to green spaces, and housing availability, which are fundamental to a healthy and happy society.
  4. What is an interesting point that Sturgeon makes about the work that Iceland, Scotland, and New Zealand do around promoting well-being? These countries are led by women.
  5. What does Sturgeon argue should be at the heart of our vision of society? Sturgeon argues that well-being, not just economic wealth, should be at the heart of our vision of society. This involves ensuring that policies focus on making people happy, healthy, and fulfilled rather than solely pursuing economic growth.

Alternative Development Indices Inquiry

Choose five of the following indices to inquire into and answer the prompt that follows below.

  1. What does it measure? Be specific - don’t only identify the general area of measurement but research (likely by looking at the methodology) the specific indicators. 

  2. What is its rationale for measuring what the index measures? 

  3. Choose two countries as a case study and track their location on each index. 

    1. What were some of the themes or correlations that you discovered across indices?

    2. Were there any surprises or things you didn’t expect?

  4. Assess the index (one pro and one con) and then rank it against the other indices you researched, with 1 being the best development index and 5 being the weakest. Explain why you ranked them as you did.

 Teacher only box

What follows is an example of what a student might produce for one of the five indices they chose:

Happy Planet Index (HPI) Exemplar

What does the Happy Planet Index measure?
The Happy Planet Index (HPI) measures sustainable well-being by combining data on life expectancy, well-being (as self-reported by residents), and ecological footprint. The specific indicators are:

  • Life expectancy: The average number of years a person is expected to live in a given country.
  • Well-being: The subjective measure of how satisfied people feel with their lives overall, typically gathered through surveys.
  • Ecological footprint: The average impact that residents of a country have on the environment, expressed in global hectares per person.

What is its rationale for measuring what the index measures?
The rationale behind the HPI is to provide a more holistic measure of a country's success that goes beyond economic output.

Cases:
Costa Rica:

  • Life Expectancy: 80.3 years
  • Well-being: 7.3/10 
  • Ecological Footprint: 2.8 global hectares per person

Japan:

  • Life Expectancy: 84.6 years
  • Well-being: 5.9/10
  • Ecological Footprint: 4.8 global hectares per person

Assessment of the Index

  • Pro: holistic approach - The HPI provides a comprehensive view of sustainable well-being, balancing happiness, health, and environmental impact.
  • Con: subjectivity in well-being - The reliance on self-reported well-being can introduce bias and may not accurately reflect the overall happiness of a population.

 

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