Explain the indicators of economic development. |
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| Ans : An economic indicator is a statistic that measures economic activities such as unemployment rate, industrial production, literacy rate, standard of living etc. Economic indicators help to analyze the economic performance and prediction of future performance of a country. The measures indicators of economic development are explained below:
i) Per capita income:- It is the average income of each individual in an economy. It is obtained by dividing national income by total population. Economic development is achieve only when the increase in national income is greater than the increase in population growth.
If there is high income inequality then per capita income is not a satisfactory indicator of economic development.
ii) Physical quantity of life index:- It consists of three indicators, they are:
a) Life expectancy
b) Infant mortality rate
c) Literacy rate
It is considered as a native as well as good indicator of economic development. The value of PQLI is measured in a scale of 0 to 100. If people leave longer and are literate, PQLI will be high. If it’s value process 50+, the country is supposed to be developed and if the value life below 50, the nation supposed to be developing.
iii) Human development index:- Human development index was introduce by UNITED NATIONS DEVELOPMENT (UNDP) in 1990. According to this criteria economic development is evaluated on the basis of following:
a) Per capita income
b) Literacy rate
c) Life expectancy
It’s value ranges from 0 to 1. Value closer to 0 shows low economic development. And value closer to 1 shows high economic development. The HDI for Nepal and Norbey is 0.574 and 0.953 respectively for a year 2018.
iv) Rise in factor productivity:- The economy growth depends on the increase in factor inputs and technological progress that is taking place is an economy. Improvement in technology makes factor inputs more productive. Therefore, economic development depends upon growth in resources (i.e. factor inputs such as land, labor, capital etc.)
v) Rise in standard of living:- The main objectives of development is to provide better life to the people. It refers to increase in average consumption level of individual and society. Therefore, rise in standard of living is also an economic indicator which suggests that economic development is achieved in an economy.
vi) Basic human needs:- This criteria of economic development was developed by world bank. According to these criteria, those countries which are unable to fulfill basic needs are developing countries otherwise they are supposed as developed country.
vii) Poverty alleviation and inequality reduction:- As a nation developed, poverty must be reduced and the gap between rich and poor must be reduced along with each. If a nation has able to reduce the poverty and gap between rich and poor, it can be regarded as developed otherwise developing.
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