Development economics

Table of Contents

1. Topic pack - Development economics - introduction
2. 4.1 Economic development (notes)
3. 4.1 Economic development (questions)
4. 4.2 Measuring Economic Development (notes)
   1. Measuring Economic Development - introduction
   2. Building a development Database (Part 2)
   3. Limitations of using GDP to compare welfare
   4. Comparing welfare
   5. Building a development database (Part 3)
   6. Alternative single indicators
   7. Building a development database (Part 4)
   8. Perspectives on development (videos)
   9. Gapminder data
   10. Composite indicators
   11. Building a development database (Part 5)
   12. Problems of measuring development
   13. Building a development database (Part 6)
5. 4.2 Measuring development (questions)
6. 4.3 The role of domestic factors in economic development (notes)
7. 4.3 The role of domestic factors in economic development (questions)
8. 4.4 The role of international trade (notes)
9. 4.4 The role of international trade (questions)
10. 4.5 The role of Foreign Direct Investment (FDI) (notes)
11. 4.5 The role of foreign direct investment (questions)
12. 4.6 The role of foreign aid and multilaterial development assistance (notes)
13. 4.6 The role of foreign aid and multilateral development assistance (questions)
14. 4.7 The role of international debt (notes)
15. 4.7 The role of international debt (questions)
16. 4.8 The balance between markets and intervention (notes)
17. 4.8 The balance between markets and intervention (questions)
18. Print View

Limitations of using GDP to compare welfare

GDP measures growth of the production of goods and services for the population. Therefore we usually see an increse in GDP as a good thing for a country.

We need to be careful when looking at growth and what it tells us about an economy. Simply because a country appears to be getting wealthier does not actually mean that the people are better off.

Indeed, using national income figures, such as GDP, as measures of living standards may be inappropriate. An increase in real GDP denotes an increase in the output of goods and services of the economy, but does this necessarily lead to a corresponding increase in welfare? You can think of welfare being to do with the quality of life while GDP is a quantitative measure.

Make a list of the reasons why an increase in GDP may not be to the benefit of the people in a country.

Make a conclusion about using standard of living (Quantity) to measure Welfare (Quality)