Development is broader than growth — it's about living standards, health, education and opportunity. This final sub-theme covers how we measure development, what…
Development is broader than growth — it's about living standards, health, education and opportunity. This final sub-theme covers how we measure development, what holds it back, and the strategies used to promote it.
🎯 Learning objectives — by the end of 4.6 you can…
- explain the HDI and other measures of development, with their limitations; - explain the economic and non-economic constraints on development; - evaluate market-orientated and interventionist development strategies; - explain the role of the World Bank, IMF and NGOs.
4.6.1 Measuring development (HDI)
Spec: 4.6.1
Economic development means an improvement in welfare and quality of life — broader than growth in GDP. The best-known measure is the Human Development Index (HDI), a composite (scaled 0–1) of three components:
| HDI component | Measured by |
|---|---|
| Health | Life expectancy at birth |
| Education | Mean and expected years of schooling |
| Income | GNI per capita (at PPP) |
Evaluation
Strengths & limitations of the HDI
Strengths: far broader than GDP — it captures health and education, not just income. Limitations: it ignores inequality, the environment, political freedoms and the quality of schooling and healthcare. Other useful indicators include the % of adult male labour in agriculture, access to clean water, energy consumption per capita, and access to internet, mobile phones and doctors per thousand people.
4.6.2 Constraints on development
Spec: 4.6.2
| Economic constraints | Non-economic constraints |
|---|---|
| Commodity price volatility | Corruption |
| Primary product dependency (the Prebisch-Singer hypothesis — falling terms of trade for primary exporters) | Poor governance |
| Savings gap (the Harrod-Domar model — low savings → low investment → low growth) | Civil wars |
| Foreign-currency gap & capital flight | Migration (e.g. brain drain) |
| Debt, weak infrastructure, poor access to credit, low education/skills | Terrorism and instability |
4.6.3 Strategies for development
Spec: 4.6.3
| Market-orientated | Interventionist | Other |
|---|---|---|
| Trade liberalisation | Develop human capital | Industrialisation (the Lewis dual-sector model) |
| Promote FDI | Protectionism (infant industries) | Develop tourism |
| Remove subsidies; privatisation | Managed exchange rates | Develop primary industries |
| Floating exchange rates | Infrastructure development | Debt relief |
| Microfinance schemes | Joint ventures with TNCs; buffer stocks | Aid |
Key terms
International institutions
- World Bank — long-term loans and development projects; - International Monetary Fund (IMF) — promotes stability and supports countries with balance-of-payments problems; - NGOs — targeted, grassroots development and aid.
Evaluation — which strategy works?
Market-orientated strategies can boost efficiency and attract investment, but may widen inequality and expose a country to volatility. Interventionist strategies can build capacity and protect infant industries, but risk government failure, corruption and waste. The right mix depends on a country's institutions, stage of development and specific constraints — most success stories blend the two.
4.6 Recap — nail these
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