Summary
Economic development measures the quality of life and wellbeing in a country, while economic growth focuses on changes in national income. The Human Development Index (HDI) is a composite index that assesses development through health, education, and income.
- Economic Growth — change in national income measured by GDP or GNI. Example: A country's GDP increases by 3% in a year.
- Economic Development — broader concept focusing on quality of life and wellbeing. Example: Improved healthcare and education systems.
- Human Development Index (HDI) — composite index measuring health, education, and income. Example: A country with high life expectancy, education levels, and income scores high on the HDI.
- Inequality-Adjusted Human Development Index (IHDI) — HDI adjusted for inequality. Example: A country with high income inequality may have a lower IHDI than HDI.
- BRIC Countries — Brazil, Russia, India, and China, known for high growth prospects. Example: These countries have significant impacts on global economic trends.
Exam Tips
Key Definitions to Remember
- Economic Growth
- Economic Development
- Human Development Index (HDI)
- Inequality-Adjusted Human Development Index (IHDI)
Common Confusions
- Confusing economic growth with economic development
- Assuming HDI measures all aspects of development
Typical Exam Questions
- What are the three components of the Human Development Index and how are they measured? Health, education, and income; measured by life expectancy, years of schooling, and GNI per capita.
- If country A has a human development index of 0.9 and country B a human development index of 0.5, which one has a higher level of human development? Country A has a higher level of human development.
- Give two advantages of using the HDI as a measure of economic development and give two limitations of using the HDI as a measure of economic development. Advantages: Broader measure than GNI, reflects living standards. Limitations: Omits health quality, doesn't account for income inequality.
What Examiners Usually Test
- Understanding of the difference between economic growth and development
- Ability to explain and evaluate the components of the HDI
- Knowledge of the advantages and limitations of different development measures