What are the key indicators for measuring economic development?

Key indicators for measuring economic development include Gross Domestic Product (GDP), literacy rate, life expectancy, and Human Development Index (HDI).

Gross Domestic Product (GDP) is a primary indicator used to gauge the health of a country's economy. It represents the total value of all goods and services produced over a specific time period within a country's borders. Economists use GDP to compare the economic performance of different countries, and to make estimates of economic growth. However, GDP does not take into account income inequality or the informal economy, which can be significant in developing countries.

Literacy rate is another key indicator of economic development. It is the percentage of people above a certain age (usually 15 years old) who can read and write. Literacy is crucial for economic development as it enhances the productivity of labour and increases the efficiency of capital. A high literacy rate is often associated with a high level of human capital, which is a key driver of economic growth.

Life expectancy is a measure of the average number of years a person is expected to live, based on current mortality rates. It is an important indicator of the overall health and well-being of a population. Higher life expectancy often indicates better healthcare and living conditions, which are both crucial for economic development.

The Human Development Index (HDI) is a composite statistic of life expectancy, education, and per capita income indicators, which are used to rank countries into four tiers of human development. It was developed by the United Nations as a standard means of measuring human development—a concept that, according to the UN, refers to the process of widening the options of persons, giving them greater opportunities for education, health care, income, employment, etc. The HDI is a more comprehensive measure of economic development than GDP as it takes into account social aspects of development.

IB Economics Tutor Summary: Economic development can be measured using indicators like GDP, which shows a country's economic health, literacy rate, indicating education levels, life expectancy, reflecting health and living conditions, and the Human Development Index (HDI), combining life expectancy, education, and income. While GDP focuses on economic size, HDI offers a broader view of wellbeing and opportunities in a country.