Economic Growth and Economic Development

Economic growth refers to an increase in the size of a country's economy over a period of time. The
size of an economy is typically measured by the total production of goods and services in the
economy, which is called gross domestic product (GDP).

Economic Development is programs, policies or activities that seek to improve the economic well-
being and quality of life for a community.

 Development is measured by the quality of life in the economy by various factors like:
1. Nutrition levels.
2. Healthcare accessibility and reach, encompassing hospitals, medications, clean drinking
water, vaccinations and sanitation.
3. Educational attainment.
4. Additional determinants influencing overall quality of life.

 Different scenarios of growth and development:

 Higher growth and higher development: Balancing economic prosperity with attention to
health and education.
 Higher growth but lower development : Emphasizing economic growth at the expense of
health and education.
 Lower growth but higher development : Prioritizing health and education over economic
growth.
 Measuring Development

The human development concept was developed by economist Mahbub ul Haq. At the World Bank in
the 1970s.
He believed that the commonly used measure of Gross Domestic Product failed to adequately
measure well-being. Working with Nobel Laureate Amartya Sen and other gifted economists, in 1990
Dr. Haq published the first Human Development Report, which was commissioned by the United
Nations Development Programme.

 Human Development Index

The UNDP introduced the Human Development Index (HDI) in 1990 as a means to measure the
developmental level of economies.
HDI combines three key indicators: Health, Education and Standard of Living to create a composite
index.

1. Education (Since HDR-2010): Comprises two indicators:

 Mean years of schooling (for adults aged 25 years)

 Expected years of schooling (for children of school-entering age)

2. Health: Measured by life expectancy at birth with a minimum of 20 years and a maximum of 83.57
years.

3. Standard of Living: Measured by Gross National Income per capita at Purchasing Power Parity (PPP
$) with a minimum of $100 (PPP) and a maximum of US $87,478 (PPP).
Scoring: The scores for the three-dimension indices are aggregated into a composite index using the
geometric mean which ranges from 0 to 1.

Classification of Countries: Based on their HDI scores, countries are categorized into three groups:

1. High Human Development Countries: 0.800–1.000 points

2. Medium Human Development Countries: 0.500–0.799 points
3. Low Human Development Countries: 0.000–0.499 points

 Gross National Happiness (GNH): Bhutan's Development Concept

Bhutan introduced Gross National Happiness (GNH) in the 1970s alongside UNDP's human
development concept.

Parameters of GNH:

 Higher real per capita income.

 Good governance.
 Environmental protection.
 Cultural promotion, emphasizing ethical and spiritual values.

Parameters for Ranking:

1. GDP per capita (at PPP).

2. Social support (availability of someone to count on).
3. Healthy life expectancy at birth.
4. Freedom to make life choices.
5. Generosity.
6. Perception of corruption.

In July 2011, a significant UN General Assembly resolution urged member countries to assess their
citizens' happiness for informing public policies. In April 2012, the first UN high-level meeting on
happiness and well-being led by Bhutan's Prime Minister took place.

Around the same time the inaugural World Happiness Report was published marking the beginning
of measuring global happiness.

Subsequently, the OECD Guidelines were established, providing a global benchmark for measuring
well-being.

World Happiness Report Human Development Index (HDI)

Composite index of health, education and

Self-reported happiness of citizens income.

GDP per capita, social support, healthy life Life expectancy, education (years of schooling
expectancy, freedom to make life choices, and expected years of schooling) and per
generosity and perception of corruption. capita income (PPP-adjusted).

Assess well-being and happiness to inform Evaluate and compare human development
policy. across countries.
World Happiness Report Human Development Index (HDI)

Multiple international sources and

Self-reported surveys government data.

Annual Periodic updates, typically yearly.

2012 by the UN 1990 by the UNDP.

Comprehensive assessment, including health

Subjective well-being and happiness. and education.

Ranks countries by HDI scores, categorizes

Ranks countries by reported happiness levels. them.

 Gender inequality index

 It is released by UNDP.
 It assesses gender inequalities in three human development areas: reproductive health,
empowerment and economic status.
 Reproductive health is evaluated through maternal mortality and adolescent birth rates.
 Empowerment considers female parliamentary representation and education levels.
 Economic status is measured by labour force participation rates for individuals aged 15 and
older.
 GII follows the same framework as IHDI and exposes gender-based differences in human
development.
 A higher GII value indicates greater disparities between genders and more significant losses
in human development.
 Gender Development Index (GDI)
UNDP calculates GDI as a part of its Human Development Report. GDI is the ratio of female to male
HDI values. As per HDR 2021-22 the GDI value of India is 0.849, with the GDI value for females as
0.567 and for males as 0.668.

 Global Gender Gap Index (GGGI) –

It is published by the World Economic Forum. India ranks 135 among 146 countries in the Global
Gender Gap Index 2022.
It benchmarks countries on their progress towards gender parity in four Key dimensions:
 Economic Participation and Opportunity
 Educational Attainment
 Health and Survival
 Political Empowerment

On each of the four sub-indices as well as on the overall index the GGG index provides scores
between 0 and 1, where 1 shows full gender parity and 0 is complete imparity.

It is the longest-standing index, which tracks progress towards closing these gaps over time since its
inception in 2006.
 Sustainable Development
Sustainable development, as defined by the United Nations, refers to "development that meets the
needs of the present without compromising the ability of future generations to meet their own
needs." It involves the harmonization of three key elements: economic growth, social inclusion and
environmental protection.

Sustainable Development Goals (SDGs)

 Adopted by the United Nations in 2015, SDGs, or Global Goals, constitute a universal call to
action.
 Aim to eradicate poverty, safeguard the planet, and ensure universal peace and prosperity by
2030.
 Comprises 17 interconnected SDGs emphasizing the interdependence of actions in various
areas.
 Recognizes the need for balanced development encompassing social, economic and
environmental sustainability.
 Countries pledge to prioritize progress for the most marginalized segments of society.
 SDGs aspire to eliminate poverty, hunger, AIDS and gender discrimination, promoting
inclusivity.
 India has demonstrated substantial commitment to advancing Goal 13 of the SDGs.
 Goal 13 emphasizes the necessity for urgent measures to combat climate change and its
detrimental effects.

Sustainable Development
Report:
● It is a global assessment of
countries’ progress toward
achieving the Sustainable
Development Goals
● It is published by a group
of independent experts at
the Sustainable Development
Solutions Network (SDSN).