Measuring Economic Development (Single and Composite Indicators)

Country with low human development: Niger

• Social indicators:
• HDI ranking and value: #187 0.337
• Age structure:
• 0-14 years: 49.8% (male 4,387,785/female 4,308,312) 
• 15-24 years: 18.4% (male 1,586,720/female 1,626,457) 
• 25-54 years: 25.9% (male 2,261,287/female 2,266,576) 
• 55-64 years: 3.3% (male 294,446/female 274,268) 
• 65 years and over: 2.6% (male 234,079/female 226,242) (2014 est.)
• Population growth rate: 3.8%
• School life expectancy: 
• total: 5 years
• male: 6 years
• female: 5 years (2012)
• Life expectancy at birth: 57.97 years
• Total fertility rate: 7.57 births per woman (2012)
• Education expenditures: 4.5% of GDP (2012)
• Economic indicators:
• GDP: 7.407 billion USD (2013)
• GDP per capita: 415.42 USD (2013)
• GDP - composition by sector: 
• agriculture: 35.2% 
• industry: 14.2% 
• services: 50.6% (2013 est.)
• Unemployment rate: 5.10%
• Public debt: 19.3% of GDP (2013 est.)
• Stock of direct foreign investment - at home: 84,560,003,072 US$
• Labor force - by occupation:
• agriculture: 90% 
• industry: 6% 
• services: 4% (1995)
• Dependency ratio: 112.68

Calculated gini coefficient based on data: 0.2868

Country with high human development: Uruguay

• Social indicators:
• HDI ranking and value: #50 0.790
• Age structure:
• 0-14 years: 21% (male 356,851/female 344,576) 
• 15-24 years: 16% (male 269,820/female 262,830) 
• 25-54 years: 38.9% (male 639,766/female 658,257) 
• 55-64 years: 10.1% (male 158,170/female 178,194) 
• 65 years and over: 13.9% (male 185,132/female 279,376) (2014 est.)
• Population growth rate: 0.4%
• School life expectancy:
• total:16 years 
• male: 14 years 
• female: 17 years (2010)
• Life expectancy at birth: 76.91 years
• Total fertility rate: 2.06 births per woman (2012)
• Education expenditures: 4.4% of GDP (2011)
• Economic indicators:
• GDP: 55.71 billion USD (2013)
• GDP per capita: 16,350.73 USD (2013)
• GDP - composition by sector:
• agriculture: 7.5% 
• industry: 21.5% 
• services: 71% (2013 est.)
• Unemployment rate: 6.6%
• Public debt: 57.2% of GDP (2012 est.)
• Stock of direct foreign investment - at home: $20,690,000,000 (31 December 2013 est.)
• Labor force - by occupation: 
• agriculture: 13% 
• industry: 14% 
• services: 73% (2010 est.)
• Dependency ratio: 56.12

Calculated gini coefficient based on data: 0.3848

Conclusions

What conclusions can you draw about the correlation between GDP, HDI, income equality, social and economic indicators between developed and developing countries?

Developed:
-GDP: 55.71 billion USD (2013)
-HDI ranking and value: #50 0.790
-Calculated gini coefficient based on data: 0.3848

Developing:
-GDP: 7.407 billion USD (2013)
-HDI ranking and value: #187 0.337
-Calculated gini coefficient based on data: 0.2868

Developed countries, such as Uruguay, have a much higher GDP compared to less developed countries, such as Niger. This is, of course, only based on my sample. Both USA (a developed country), and China (considered a developing country) have GDP's in the trillions, however. Developed countries have higher HDI's; however, I assumed that their income equality would also be better. With Uruguay and Niger as examples, based on the data it appears that there is more income equality in Niger. This just goes to show how careful we must be when making generalizations about undeveloped countries.

Does a high HDI correlate with relative income equality? What about low HDI?

According to the data gathered, it seems that a high HDI does not necessarily correlate with relative income equality, if compared to a country with low HDI. Uruguay's gini coefficient was found to be 0.3848, while Niger's was 0.2868.

Is a high GDP indicative of high levels of human development?

High GDP seems to indicate high levels of human development. Uruguay, for example, has a GDP of about 56 billion USD, while Niger only 7 billion USD. Uruguay has a HDI ranking of 50 while Niger 187. As such, there appears to be a correlation.

To what extent did your country with low HDI exhibit the following characteristics? 

Let us begin with low standards of living. Niger's GDP per capita is around 400 USD. Its total fertility rate is almost 8 births per woman, which suggests very low standards of living. Supporting 8 children on 400 USD a year, including yourself and all other expenses, sounds nearly impossible. Even if they do manage to survive somehow, the GDP per capita is so low and the fertility rate is so high that there simply cannot be a high standard of living.

Niger definitely exhibit low incomes. A GDP per capita of around 400 USD is insanely low. Compare that to Uruguay, where the GDP per capita is around 16,000. Uruguay's citizens make in one year what Niger's citizens make in 40 years!

Based on the calculations, it appears that Niger did not exhibit income inequality, if compared to Uruguay. Niger had a gini coefficient of 0.2868, while Uruguay had a gini coefficient of 3848, which is relatively worse.

Regarding poor health, Niger's life expectancy at birth is 19 years lower than Uruguay's, which is a huge difference. The high total fertility rate of 8 children and a very low GDP per capita of 400 USD all suggest that the citizens of Niger experience poor health. The low GDP of Niger, compared to Uruguay, also suggests that there cannot be a lot of expenditure on heath care. A low GDP means that the government gets less revenue than Uruguay's government, and thus they have less money to spend on health care.

Niger most definitely exhibits symptoms of inadequate education. Only 4.5% of the country's already very low GDP is spent on education, and the total school life expectancy is 5 years. Uruguay's is 16 years. This suggests that most residents of Niger complete only half of high school, which most likely amounts to a low-skilled labour force.

Low levels of productivity are definitely evident in Niger, based on previously examined indicators. The low GDP per capita suggest a very low output per person, and the conclusion that Niger has poor health conditions also support the hypothesis that there are low levels of productivity within the country.

Compared to Uruguay, Niger most definitely shows high rates of population growth and dependency burdens. There is a population growth rate in Niger of 3.8%, while in Uruguay it is only 0.4%. Niger's dependency ratio is twice as high as Uruguay's—112.68 and 56.12 respectively.

Niger did not show high levels of unemployment. It has an unemployment level of ~5%, while Uruguay, a highly developed country, has an unemployment level of ~6%. Perhaps this is due to the high dependency ratio: many kids who are not working are not counted towards the level of unemployment. Also, while the unemployment level may be relatively low in Niger, since the GDP per capita is only 400 USD, it suggests that that 5% value is not that accurate. Sure, people may be "employed"; however, does that really mean anything if they're incomes are, on average, 400 USD?

Compared to Uruguay, Niger does have a higher dependence on agricultural production. However, only ~35% of Niger's GDP comes from agriculture compared to ~51% from services. Therefore, there does not appear to be a very significant dependence on agricultural production.

Regarding foreign direct investment, there is about 85 billion USD worth of foreign investment stock in Niger, compared to about 20 billion USD in Uruguay. That is over four times as much, and considering their huge differences in GDP, 85 billion USD worth of foreign investment stock is a lot more in Niger than if it were in Uruguay, because suggests a large percentage of revenue does not stay in Niger.

How can you explain the concepts of single and composite indicators? To what extent are these indicators effective?

A single indicator could be considered something like the unemployment rate. It measures one variable, such as the level of unemployment. A composite indicator is something like HDI. Its value is based on multiple different single indicators, which amount to a more effective indicator of economic development. A single indicator is not as effective in terms of showing economic development, because it only takes into consideration one variable. Sure, the unemployment level in a country, such as Niger, may be low (~5%); however, many other indicators (GDP per capita, foreign investment stock, public debt, school life expectancy, and life expectancy) are not necessarily suggesting high human development within Niger. Therefore, composite indicators are more effective than single indicators, because they take into consideration multiple variables, which together amount to a more well-rounded conclusion on HDI.