1. DEVELOPMENT

2. Key Terms
Economic growth – Process by which a nation's wealth increases over
time. The most widely used measure of economic growth is the real rate
of growth in a country's total output of goods and services (measured by
the gross domestic product (GDP) adjusted for inflation). 1
Economic Development – is about jobs, income, and community
prosperity—is a continuing challenge to modern society. To meet this
challenge, economic developers must use imagination and common
sense, coupled with the tools of public and private finance, politics,
planning, micro- and macroeconomics, engineering, and real estate. 2
Sustainable development – ―Sustainable development is development
that meets the needs of the present without compromising the ability of
future generations to meet their own needs.‖ 3

3. Key Terms
Gross Domestic Product (GDP)
This is the value of all goods and services produced within
a country. It is usually measured in US$ and calculated
per capita. This makes comparisons between different
countries easier.
Gross National Product (GNP)
Includes income from investments abroad (US$)
Purchasing Power Parity (PPP)
Takes into account local cost of living and is usually
expressed per capita (US$)
GDP or GNP per capita
GDP or GNP divided by the total population

4.  Development is difficult to measure
because so many factors must be
considered.
 Factors can be grouped under
Economic Development and Social
Development

5.  Not all countries have developed at the same rate and globally
there is a very unequal distribution of wealth
 The richer countries are known as More Economically
Developed Countries (MEDCs)
 The poorer countries are known as Less Economically
Developed Countries (LEDCs)
 MEDCs have only 20% of the world's population but own 80%
of the world's wealth
 MEDCs are mainly found in the northern hemisphere and
consist of countries such as USA, Canada, Britain, Germany &
Japan
 LEDCs are mainly found in the southern hemisphere and
mainly in the continents of Africa, Asia & South America

6.  The most important factor used to measure a country's development
is GNP. It is calculated by adding up the values of all the goods and
services produced in a country during the year.
 GNP is used to compare the wealth of countries, which means it is
an economic factor.
 GNP can be misleading for a number of reasons
 In Africa there are few records of goods being sold and bartering goods
still takes place
 Not all countries in the world provide information for political reasons

7.  Currency fluctuations  Negative externalities of
 Does not reflect inflation economic growth are not
included (eg pollution,
 Does not take into
environmental damage)
account subsistence or
informal economies which  Can hide inequalities
are very important in less because they do not show
developed countries distribution of wealth

8.  Social Development is measured using Population
Data
 Birth Rate - A high birth rate would indicate a LEDC and a low
one a MEDC.
 Death Rate - A high death rate would indicate a LEDC and a low
one would similarly a MEDC.
 Life Expectancy - If a country had a low life Expectancy such as
40-50 yrs this would indicate a LEDC and one with in excess of
70 would be a MEDC.
 Infant Mortality - This is the number of infant deaths per 1000
population - obviously a country with a high rate would be a
LEDC
 Population per Doctor - Again the amount will indicate the type
of country's development. A country with a high number of people
per doctor will be a LEDC.

9. MEDCs LEDCs
 High GNP  Low GNP
 Low birth and death  High birth rates
rates  Low levels of literacy
 High levels of literacy  Limited access to safe
 Exports mainly water and sanitation
manufactured goods
 Most people have
access to safe water
and sanitation

10. The Human Development Index (HDI)
As you can see there are two distinctive ways development can be
measured - none is perfect! So in 1990 the United Nations introduced the
HDI and it works by ranking countries according to their Quality of Life of
their citizens. The HDI is a composite of three variables:-
Life Expectancy - is regarded as the best measure of a country's health
and safety
Education - attainment is obtained by combining adult literacy rates and
the average number of years spent at school
Income per Capita - is adjusted to actual purchasing power i.e. what an
income will actually buy in a country.

11. Life Real GNP
Expectanc Literacy Years of per capita
Rank Country y Rate School $ HDI
1 Norway 78 99.5 11.8 24 940 .939
2 Australia 80 99.5 11.6 18 950 .938
3 Canada 79 99.5 12.1 21 130 .936
4 Barundi 49 50 0.2 620 .309
5 Niger 41 53 0.2 750 0.274
Sierra
6 Leone 48 29 0.5 580 .258
As you can see from the three methods used that the HDI is probably the
fairest and most accurate. However it cannot disguise the fact that if you
placed a map showing GNP and HDI together they would be very similar. A
country must have wealth before it is able to spend it on improving the
quality of life of its people.

12. 1. Answers.com at http://www.answers.com/topic/economic-growth-2
2. All about Economic Development at
http://www.economicdevelopment.net/ad_n/about.htm
3. World Commission on Environment and Development (WCED), Our
Common Future (New York: Oxford University Press, 1987),