GNP does have its weakness because it does not take into account inequalities in income, it only states the national average. It does not take into account general costs of living, as well as regional variations. A more realistic measure of differences would be to consider GNP converted at purchasing power parity rates. These compare different GNPs using exchange rates which take account of differences in the cost of living. However, adjusting GNP at purchasing power parity rates can significantly alter a country’s ranking in world GDP league tables. For example, using PPP, Luxembourg is the world’s wealthiest nation, however traditional GNP per head makes Switzerland the world’s wealthiest nation. It can be said that using PPP causes inaccuracies too. Generally, PPP lifts GNP per head for most developing countries and former communist states but lowers it for developed countries.
Give the figures, perhaps as a table as well as using the data in with your writing. At the end of this paragraph ( and all the others) link back to the title to say what has been shown- sum up in relation to the relevance to the question.
Another indicator of development economist’s use is Gross Domestic Product or GDP. GDP can be defined as the total monetary value of all goods and services produced by a nation (in 1 year). Generally, it is said that the lower the level of GDP the poorer the development level of the country. For example, a low level of GDP would indicate poor infrastructure. However, there are large differences between countries which have little correlation with GNP levels. For instance, the USA have fewer paved roads as a percentage of it total than Thailand. This is likely to reflect the low densities of population in much of the USA where it is uneconomic to pave roads. Not clear that this matters- the point is confused. Again use data.
Although one of the weaknesses of economic indicators are that they do not include non-monetary factors such as levels of urbanization, manufacturing workforce, life expectancy an economic ( socio-economic?) indicator which does aim to look at non-monetary indicators is human capital. Developing countries have lower levels of human capital (the total value of expertise held by a worker which contribute to their productivity) than developed countries. However, again it is difficult to measure levels of human capital. Nevertheless, educational statistics can provide indicators they are unreliable as again, they only state an average. You could examine the sort of variables that are linked to life expectancy.
As mentioned above, economic indicators only show the state of the countries economy rather then the general well being. Social indicators often combine factors such as literacy, mortality and life expectancy. This is much more representative as they revel the general standard of living in each country. For example, one social and demographic indicator is the PHYSICAL QUALITY OF LIFE INDEX (PQLI). This is a comparative measurement of a nations general well-being based on three social indicators: life expectancy at age 1, infant mortality and adult literacy rates. Although this index is quite simple to use, the disadvantage is that it is somewhat to simplistic and only considers a narrow range of factors. Another social factor is the INDEX OF SUSTAINABLE ECONOMIC WELFARE (ISEW). This aims to take into account income distribution, environmental destruction and natural resource degradation. Although this aims to be more detailed, there is limited use of data, therefore it is impossible to make statements on the level of development. The HUMAN POVERTY INDEX is another indicator which is based on three main areas of deprivation: survival, knowledge and standard of living. The higher the index, the greater the poverty in that country. The best social indicator by far is the HUMAN DEVELOPMENT INDEX as it is an aggregate of adult literacy and years of schooling, life expectancy and GDP per person. The HDI was developed by the UN and extends the definition of development. Since its introduction in 1990 the HDI has been modified in response to many criticisms but now it is recongnised as a valuable tool which draws attention to important issues quite effectively. Nevertheless, although the HDI measures overall progress in a country in achieving human development, based on national-scale data its weakness is it does show differences between rural and urban areas, between different regions or different genders.
The fact that is has been developed and used by the United nations is significant.
It can be deduced that although social and economic indicators do have their relative
merits, they have many weaknesses. Generally, it can be said that economic indicators measures the wealth of the country but gives little indication of the standard of living of the majority of people. The World Bank does classify GNP as an economic indicator of development but stresses that,
‘Classification by income does not necessarily reflect development status’
Expand on the reasons behind this. You should also name your source
Social indicators may seem to be better indicators because they revel the general standard of living in a country; however they do not reflect inequalities in income distribution. They also don’t take into account constant review as definitions and concepts of the term development change.