Economic development and its measurement

              

              Economic development:

 There is no single and precise definition of economic development different economists has defined economic development differently.

          According to kindle Berger:

Economic development is the combination of economic growth and structure changes in the economy.

Measurement of economic development:

Economic development can be measured with the help of the following methods.

                                      Real GNP approach.

                                      Per capita income approach.

                                      Social welfare approach.

     Human development index.

1.     Rea GNP approach:

Real GNP approach is an important measure of the economic development of a country. If real GNP of a country increases over a long period of time, then the economic conditions of the people improver which is regarded as economic development. If real GNP of a country increases for a short period of time, it will never be considered as economic development.

2.     Per capita income approach:

Per capita income approach is another important measure of economic development. Some economists are of the view that if per capita income increases over a long period of time, it will be considered as economic development. According to this method. If per capita income of a country increases then each resident of the country will be able to attain more goods and services than before consequently the poverty level will come down and the living standard of the people will improve. Per capita income can be obtained. If we divide GNP by total population.

                                                        

         

            Per capita income =      ___    GNP____

                                                      Total population

3.     Social welfare approach:

This approach is also used for measuring economic development. According to this approach, if the citizens of a country are able to get and consumer more goods and services than before, then the economic welfare of the people will rise. According to Okum and Richardson “economic development is a sustained improvement in three materials well being which is reflected in an increasing flow of goods and services.

4.     Human development index:

This measure of economic development was presented by united nation development programmer (UNDP) in 1990. This measure of economic development is based on the following three goals.

v Life expectancy.

v Education.

v Standard of living.

                 If in a country all these three goals are improving and moving upward, then it will be considered as economic development in the HDI ranking out of 174 countries Canada is at the top and Pakistan ranks 132th.