1: Measuring development (GDP, HDI, MPI)

Measuring Development: GDP, HDI, and MPI

Quantifying development is crucial for understanding progress, comparing countries, and designing effective policies. While development is a complex, multi-dimensional concept, specific metrics provide standardized ways to capture key aspects. Three prominent measures are GDP, HDI, and MPI.

1. Gross Domestic Product (GDP): GDP remains the most widely used economic indicator. It measures the total monetary value of all final goods and services produced within a country's borders in a specific period (usually annually or quarterly). Per capita GDP (GDP divided by population) is often used as a rough proxy for average living standards. While high GDP per capita often correlates with better infrastructure and services, its limitations are significant. It captures market activity but ignores income distribution – a country can have high GDP with extreme inequality. Crucially, GDP excludes non-market activities (like unpaid care work), environmental degradation costs, and overall well-being factors like health or happiness. It primarily reflects economic output, not necessarily equitable or sustainable development.

2. Human Development Index (HDI): Introduced by the UNDP in 1990, the HDI addresses GDP's narrow focus by incorporating broader dimensions of human well-being. It combines three components into a single index (0 to 1):

   • Health: Measured by life expectancy at birth.
   • Education: Measured by mean years of schooling and expected years of schooling.
   • Standard of Living: Measured by Gross National Income (GNI) per capita (PPP-adjusted).
     By averaging these normalized indicators, HDI provides a more holistic view of development beyond pure economic output. It highlights achievements in health and education, showing that countries can achieve high human development even with moderate income levels. However, HDI remains an average and doesn't capture internal inequalities, environmental sustainability, or political freedoms.

3. Multidimensional Poverty Index (MPI): Also developed by the UNDP (with OPHI), the MPI explicitly focuses on poverty's multiple, simultaneous deprivations experienced by individuals and households. It identifies people as multidimensionally poor if they fall below thresholds in at least one-third of ten weighted indicators grouped into three dimensions:

   • Health: Child mortality, Nutrition.
   • Education: Years of schooling, School attendance.
   • Living Standards: Cooking fuel, Sanitation, Drinking water, Electricity, Housing, Assets.
     The MPI produces a headcount ratio (percentage of people poor) and an intensity measure (average share of deprivations poor people face). This allows for detailed analysis of poverty's nature and depth within a population, revealing interlinked deprivations often missed by purely income-based poverty lines. It is particularly valuable for targeting interventions effectively.