ECS3707
Assignment 3 Semester 2 2024
Detailed Solutions, References & Explanations
Unique number: 895997
Due Date: 17 September 2024
QUESTION 1
1.1.
GDP per capita, the Human Development Index (HDI), and the Multidimensional Poverty Index
(MPI) are commonly used to assess a country's development, but each captures different
dimensions of progress, offering unique insights into the quality of life and development challenges.
GDP per capita, calculated by dividing a nation's total gross domestic product by its population,
measures the average income or economic output per person. It is primarily an economic indicator
that reflects the market value of all goods and services produced within a country in a given period.
While GDP per capita provides a snapshot of economic activity and potential for material wealth, it
has significant limitations. It does not consider income distribution, inequality, or non-market
activities, such as unpaid care work or the informal economy (Stiglitz, Sen & Fitoussi, 2009).
Furthermore, GDP per capita does not account for environmental degradation or the sustainability
of growth, making it a limited tool for measuring broader development outcomes.
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QUESTION 1
1.1.
GDP per capita, the Human Development Index (HDI), and the Multidimensional
Poverty Index (MPI) are commonly used to assess a country's development, but each
captures different dimensions of progress, offering unique insights into the quality of
life and development challenges.
GDP per capita, calculated by dividing a nation's total gross domestic product by its
population, measures the average income or economic output per person. It is
primarily an economic indicator that reflects the market value of all goods and services
produced within a country in a given period. While GDP per capita provides a snapshot
of economic activity and potential for material wealth, it has significant limitations. It
does not consider income distribution, inequality, or non-market activities, such as
unpaid care work or the informal economy (Stiglitz, Sen & Fitoussi, 2009).
Furthermore, GDP per capita does not account for environmental degradation or the
sustainability of growth, making it a limited tool for measuring broader development
outcomes.
In contrast, the Human Development Index (HDI) offers a more comprehensive view
by incorporating three dimensions: health (measured by life expectancy at birth),
education (measured by mean years of schooling and expected years of schooling),
and standard of living (measured by Gross National Income per capita). The HDI is a
composite index that captures not only economic prosperity but also social indicators,
making it a more holistic measure of development than GDP per capita. However,
despite its broader scope, the HDI has been critiqued for oversimplifying complex
dimensions of human development into a single index, which can mask underlying
disparities within countries (Klugman, 2011).
The Multidimensional Poverty Index (MPI), developed by the Oxford Poverty and
Human Development Initiative, further expands the concept of development by
measuring poverty through ten indicators across three dimensions: health, education,
and living standards. These indicators include factors such as child mortality,
malnutrition, years of schooling, access to clean water, sanitation, and electricity.
Unlike GDP per capita and HDI, which focus on national averages, the MPI
emphasizes the lived experiences of the poor and highlights deprivations across
Disclaimer
Extreme care has been used to create this document, however the contents are provided “as is” without
any representations or warranties, express or implied. The author assumes no liability as a result of
reliance and use of the contents of this document. This document is to be used for comparison, research
and reference purposes ONLY. No part of this document may be reproduced, resold or transmitted in any
form or by any means.
, +27 67 171 1739
multiple dimensions, providing a granular understanding of poverty (Alkire & Foster,
2011). The MPI offers insights into how people are impacted by various forms of
deprivation that go beyond income, thus enabling policymakers to design targeted
interventions.
In conclusion, while GDP per capita serves as a useful measure of economic activity,
it fails to capture the social, environmental, and distributive aspects of development.
The HDI offers a broader perspective by integrating health and education, but it
remains somewhat limited in addressing inequality. The MPI, with its multidimensional
approach, presents the most comprehensive picture of human well-being, recognizing
that poverty and development are multifaceted issues. To fully understand
development progress, policymakers should consider using these broader indices
alongside GDP per capita (Alkire & Foster, 2011).
1.2.
Gross Domestic Product (GDP) per capita, which measures a country's average
economic output per person, has been a widely used indicator of development.
However, this metric is often critiqued for its narrow focus on economic growth, which
may not adequately capture the well-being or quality of life of individuals. Amartya
Sen's capability framework challenges the reliance on GDP per capita as a sole
indicator of development by emphasizing that development is not just about economic
output but about expanding people's substantive freedoms and capabilities to lead
lives they value (Sen, 1999).
One of the strengths of GDP per capita is its ability to provide a snapshot of a country's
economic performance, which is crucial for policymakers and investors. It is easy to
compute, allowing for comparisons across time and between countries. Higher GDP
per capita generally suggests that a country has more resources to invest in public
goods, such as healthcare, education, and infrastructure, which are essential for
improving living standards (Todaro & Smith, 2015). Additionally, it serves as an
indicator of economic growth, which is often a prerequisite for development, especially
in countries that are struggling to meet basic material needs.
Disclaimer
Extreme care has been used to create this document, however the contents are provided “as is” without
any representations or warranties, express or implied. The author assumes no liability as a result of
reliance and use of the contents of this document. This document is to be used for comparison, research
and reference purposes ONLY. No part of this document may be reproduced, resold or transmitted in any
form or by any means.
