Tuesday, March 07, 2006


Several metrics of "progress" exist and are widely/interchangebly used as indicators of "progress" or state of a nation/country. Here are definitions of a few metrics (mostly from Wikipedia):

  • GDP: Gross Domestic Product (GDP) is the total value of final goods and services produced within a country's borders in a year.
        GDP = private consumption + government expenditure + investment + net exports

  • GNP: Gross National Product (GNP) is the total value of final goods and services produced in a year by a country's nationals (including profits from capital held abroad)

  • HDI: The UN Human Development Index (HDI) is a comparative measure of poverty, literacy, education, life expectancy, childbirth, and other factors for countries worldwide. The index was developed in 1990 by the Pakistani economist Mahbub ul Haq, and has been used since 1993 by the United Nations Development Programme in its annual report. The HDI measures the average achievements in a country in three basic dimensions of human development:
        * A long and healthy life, as measured by life expectancy at birth.
        * Knowledge, as measured by the adult literacy rate (with two-thirds weight) and the combined primary, secondary, and tertiary gross enrolment ratio (with one-third weight).
        * A decent standard of living, as measured by gross domestic product (GDP) per capita at purchasing power parity (PPP) in USD.

  • Gini Index: The Gini coefficient is a measure of inequality developed by the Italian statistician Corrado Gini and published in his 1912 paper "Variabilit√† e mutabilit√†". It is usually used to measure income inequality, but can be used to measure any form of uneven distribution. The Gini coefficient is a number between 0 and 1, where 0 corresponds with perfect equality (where everyone has the same income) and 1 corresponds with perfect inequality (where one person has all the income, and everyone else has zero income). The Gini index is the Gini coefficient expressed in percentage form, and is equal to the Gini coefficient multiplied by 100.

  • PQLI: The physical quality-of-life index (PQLI) is an attempt to measure the quality of life or well-being of a country. The value is a single number derived from basic literacy rate, infant mortality, and life expectancy at age one, all equally weighted on a 0 to 100 scale.

    tejal said...

    GDP = private consumption + government expenditure + investment + net exports

    So you never subtract nething to calculate the GDP?
    All the huplaha abt 10% growth (10% GDP growth) is quite over rated in my opinion....as everytime a cancer is diagnosed-the GDP increases, every time there is an oil spill - the GDP increases, when the Tsunami hit, the stock markets(in the countries that had stock markets) were soaring!..... This would lead me to believe that the GDP indicates exactly the opposite of ground reality.... the smell of reconstruction money, makes stocks soar and pushes the GDP up....
    Maybe that is why, when hundreds of farmers are committing suicide in India, the growth is still 10%!

    Purushottam said...

    net exports = exports - imports

    one of the important drawbacks of GDP is that it does not capture inequality. Looking at the HDI and the GINI index, India is slipping over the past few years, implying greater inequality---economic and for access to health, education and life expectancy etc.

    neil said...

    I dont know on what basis you said that, any links?
    After doing a survey of various HDR http://hdr.undp.org/
    I got these numbers

    HDI Population
    1970 0.388(approximate) 541Millions
    1975 0.407
    1990 0.439 839 Millions
    1998 0.451 not very sure about this one
    2000 0.577 1019 Millions
    2002 0.602
    Looks like we have done quite well in recent years compared to 70's
    1998 139
    2002 124

    neil said...

    oops, the last number is 127 not 124

    neil said...

    looks like our GINI coefficient is much better than U.S., China and surprisingly Russia

    tejal said...

    it seems like India has less inequality than many other countries....
    in the US, inequality seems to have increased over a period of time; I wonder what th graph for India over the past .. say 10 years looks like....

    Purushottam said...

    Neil---my bad, I should not have generalized.
    What i meant was that India's ranking using its HDI was falling or has fallen from 124 to 127 in the latest evaluation(?), but as you pointed out its HDI value itself has increased over the years.

    Also, I looked the graph on wikipedia and the Gini index forIndia is increasing from the early 90s---implying greater inequality.

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