GEOG 1HB3 Lecture Notes - Lecture 4: Gender Inequality Index, Human Development Index, Veganism
10 May 2018
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GLOBALIZATION &DEVELOPMENT III - INEQUALITY
Measuring Development with Economic Tools
The economic deelopet of a outy is easued y its ealth ad pospeity i.e. it’s average
income.
Proxy measures like GDP per capita or GNI per capita can be used to measure development of a country
but there can also be inaccurate.
GNI OR GDP: measures the total value of all materials, foodstuffs, goods and services produced by a
country for a particular year.
Although GDP and GNI per capita can be inaccurate, major corporations, the World Bank etc. make use
of GNI per capita by country to make decisions.
GNI per capita is problematic because:
1. Formal vs Informal economy: A formal economy has a lot of paper trails, money can be easily
traced, etc. while an informal economy has less paper trail and there is less access to certain
data.
• Up to 80% of all economy activity in some countries fall under informal economy and
some of the data ae’t aouted fo i the GNI fo that outy.
2. Variations within a country: Every country has some variations from its average GNI per capita.
In countries where the GNI is high, not every citizen is well off and vice versa.
3. Cost of Living: GNI pe apita does’t aout fo the ayig ost of liig i diffeet countries
causing it to be misleading and inaccurate.
Purchasing Power Parity (PPP): is a more accurate economic tool for measuring development than GNI.
It measures how much of a oo market basket of goods ad seies eah uey a puhase
locally.
Market basket – are the goods and services that can be purchased in any country. Comparing the
aket asket to the uey of a outy tells oe aout the outy’s ost of a living.
Example:
Let assume the average income in Ecuador is $4510 and in Canada is $41,950. Using GNI alone makes
the cost of living gap between both countries feel more significant (ten ties diffeee) hih is’t the
case. On taking into consideration the price levels and the currency of each country (PPP) the gap
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between the cost of living reduces to four times, which is more a more accurate representation of the
standard of living.
Note: The difference in average income is less significant when PPP is accounted for.
Impact of PPP on GNI: PPP reduces the GNI in wealthy countries and increases the GNI in poor
countries. This compresses the range of income.
However, even with the compression, the old’s economic wealth remains unevenly distributed.
Measuring Development with Social Tools
Social Development: This is how much social investments (education, housing, health, etc.) are made in
a country.
Economic measures cannot only be used to measure development because social development is also
important to the development of a country. Development can be defined as having access to affordable
health care in some countries than how much money a country has.
Although there is some relationship between social and economic development, in some cases high
levels of wealth and income do not well correlate with the social development. Places with high GNI can
also have low social amenities and vice versa. There are always disparities in the social and economic
development between countries and even within countries.
Can we combine measures of economic & social development?
Economic and Social Development can be combined into a more holistic measure of true development –
Human Development Index (HDI), a UN development.
1. HDI ranges from 0 (no development) to 1.0 (full development)
2. Factors like life expectancy, education levels (knowledge) and per capita income go into HDI.
3. There is a general association that exists between HDI and GNI per capita. Places with high GNI
e.g. Norway have higher HDI 0.944 while places with lower GNI like Niger has low HDI 0.337.
Although HDI is a better measure of development it is’t pefet eause it does’t take i fatos like
inequality, etc.
Measures that address Inequality: IHDI & GII
1. Inequality-adjusted Human Development Index (IHDI): identifies how achievements (economic
and social development) are distributed within a population.
2. Gender Inequality Index (GII): insights into gender gaps regarding health, education, political
representation, labour, etc. Factors like health, female and male empowerment and the ratio of
male and female in the labour market are considered in GII.
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Document Summary
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