1. What are the key limitations of per capita national income as a concept of we

Question

1. What are the key limitations of per capita national income as a concept of well-being? Explain the nature of

limitation in each case. Which of these limitations can be adjusted for? Are they in fact adjusted?

2. What is the basis of the concept of human development? Describe fully the formula by which the “human

development index” (HDI) is calculated.

3. Briefly describe the Autility@ and Acapability@ concepts and the corresponding measures (per capita national

income and the Human Development Index respectively) of economic well-being. Assess the strengths and

weaknesses of each.

4. Discuss some of the key sources of diversity among countries usually classified as "less developed countries".

What characteristics are widely shared among them that might justify their being so classified?

5. Developing countries vary along many dimensions yet we routinely group them together. Spell out and justify both

halves of this proposition.

6. What are the Millennium Development Goals? Enumerate at least 5 of them and briefly describe the nature of the

objective or target that has been set under each.

7. What are the main issues differentiating the advocacy of growth versus the advocacy of human development?

8. For both Weber and Marx, the industrial revolution in Western Europe was the child of capitalism. How, then, do

their views of the development of modern economic growth differ?

9. Sum up the main accounts of Europe’s industrial revolution, each in a sentence or two. If it is true that the industrial

revolution was the child of capitalism, what, in your own view, accounts for the rise of capitalism itself?

10. How would you characterize Western Europe's pre-capitalist economy? What features of that economy explain

economic stagnation as compared to the modern economic growth that Europe later experienced?

11. Evaluate the relevance of the colonial impact on third world countries for their contemporary development problems

and prospects.

12. Third world countries, as late industrializers, face both additional hurdles and advantages compared to early

industrializers. Substantiate this view.

Explanation / Answer

1. There are many key limitations of per capita national income as a concept of well being,for instance the growth of per capita does not necessarily mean that the economy is developing,for a economy to develop it must also consider the case of poverty, discrimination, freedom,unemployment and income distribution. The Narrow GNI only states the growth of a nation as awhole but doesn't state how each individual are also making more money or getting morefreedom. Per capitanational income is not distributed evenly amongst all of the nation's people,and in most cases it's the rich getting richer and poor remaining poor or even getting poorer. Inmany developing countries during the 1960s and 1970s there were a great increase in GNI, butthe general population showed no improvement, it actually declined in employment, equality,and real income. These limitations can be adjusted through the process in which we take into theaccount of the bad as well. To do this we must take into account all the things that is not includedin the GNI, like free labor, such as volunteer work and as well as those of which that doesn'trequire any cost like drying cloth under the sun. Also we must add to this the distribution of theincome across the citizens of the whole country.

2. Human development is defined as the process of enlarging people’s freedoms and opportunities and improving their well-being. Human development is about the real freedom ordinary people have to decide who to be, what to do, and how to live.

The human development concept was developed by economist Mahbub ul Haq. At the World Bank in the 1970s, and later as minister of finance in his own country, Pakistan, Dr. Haq argued that existing measures of human progress failed to account for the true purpose of development—to improve people’s lives. In particular, he believed that the commonly used measure of Gross Domestic Product failed to adequately measure well-being. Working with Nobel Laureate Amartya Sen and other gifted economists, in 1990 Dr. Haq published the first Human Development Report, which was commissioned by the United Nations Development Programme.

Central to the human development approach is the concept of capabilities. Capabilities—what people can do and what they can become-are the equipment one has to pursue a life of value. Basic capabilities valued by virtually everyone include: good health, access to knowledge, and a decent material standard of living. Other capabilities central to a fulfilling life could include the ability to participate in the decisions that affect one’s life, to have control over one’s living environment, to enjoy freedom from violence, to have societal respect, and to relax and have fun.

Our capabilities are expanded (or constrained) by our own efforts and by the institutions and conditions of our society. People with extensive, well-developed capabilities have the tools they need to make their vision of “a good life” a reality. Those poor in capabilities are less able to chart their own course and to seize opportunities. Without basic capabilities, human potential remains unfulfilled.

The Human Development Index (HDI) is a statistical tool used to measure a country's overall achievement in its social and economic dimensions. The social and economic dimensions of a country are based on the health of people, their level of education attainment and their standard of living.

Its a Statistical tool created by the Indian economist Amartya Sen and Pakistani economist Mahbub ul Haq. Later it was remodelled by the United States. This tool is used to measure and compare the social and economic development of a country to the other countries on the basis of three major index.
Life expectancy at Birth - Long and Healthy Life
Education index - Mean years of schooling and Expected years of schooling
Standard of Living - Gross national income per capita.

Formula
Use the formula below to find the HDI of a country
HDI = 3LEI . EI . II

Step 1:
Calculate LEI
Life Expectency Index (LEI) = LE - 20 / 85 - 20

Step 2:
Calculate EI
Education Index = MYSI + EYSI / 2

Step 3:
Calculate MYSI and EYSI
Mean Years of Schooling Index (MYSI) = MYS / 15

Expected Years of Schooling Index (EYSI) = EYS/18

Step 4:
Calculate II
Income Index (II) = ln(GNIpc) - ln(100) / ln(75,000) - ln(100)

With the derived values of LEI, EI and II, we can find the Human Development Index of a country(HDI)

Example
Lets us calculate the HDI(Human Development Index) of India
Average Indian Life Expectancy - 65
Mean Years of Schooling - 4.4
Expected Years of Schooling - 10.7
Income Index - 5,350

Average Indian Life Expectancy is 65
Life Expectency Index (LEI) = LE - 20 / 85 - 20
= 65 - 20/85 - 20
= 45/65
LEI = 0.692

Education Index = MYSI + EYSI / 2
Mean Years of Schooling Index
MYSI = MYS / 15
= 4.4 / 15 = 0.293
Expected Years of Schooling Index
EYSI = EYS/18
= 10.7 / 18 = 0.594
So, Education index = 0.29 + 0.59 / 2 = 0.88 / 2 = 0.443
EI = 0.443

Income Index (II) = ln(GNIpc) - ln(100) / ln(75,000) - ln(100)
=ln(5,350) - ln(100) / ln(75,000) - ln(100)
= 8.584 - 4.605 / 11.225 - 4.605
= 3.979 / 6.62
II = 0.60115

So, Human Development Index (HDI) of India is
HDI = 3LEI . EI . II
= 30.692 X 0.443 X 0.60115
= 3 0.184
HDI = 0.56953

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