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‘Hdi Is A Composite Index That Is A Far Better Representative Indicator Of Economic Development Than Gnp Per Capita.’ Discuss

Studying development is essentially about measuring how developed one country is compared to other countries or to the same country in the past. It is common knowledge that each country is aiming to be defined as developed. For us is to determine which measure is a better representative of how country is developed HDI or GNP per capita.

Firstly, we will define what economic development is. Secondly we will compare Gross National Product and Gross Domestic Product. Thirdly, we will outline the problems with these indicators. Finally, we will try to find out whether HDI is a solution to the problems identified in GNP/GDP.

What is economic development?

As the definition states economic development is a “sustainable increase in living standards that implies increased per capita income, better education and health as well as environmental protection.” In Process of Economic Development (J.M. Cypher and J.L. Dietz) defines two different ways of measuring economic growth and development. First is the income per person/economic growth (GNP/GDP) and second which describes development as a “complex, multi-faced notion” and that it should be captured by broader means than income like for example HDI. Others differ the ways of measuring development by dividing it to economic development and human development. Where economic development is a measure of how wealthy a country is - and of how this wealth is generated and human development measures the extent to which people have access to wealth, jobs, knowledge, nutrition, health, leisure and safety.

However before we focus on defining both indicators we need to see what is meant by development. Dictionaries state that it is an act of improving by expanding, enlarging or refining. Also it can be a process in which something passes by degrees to a different stage (especially a more advanced or mature stage). The last but not the least is that it is a state in which things are improving and that...