Indicator of Development: Per Capita Income to Human Development Index

Abstract

Today the greatest challenge of mankind is that of economic development. Every year huge investment are undertaken, numerous policies are formulated, elaborate plans are laid down, large foreign capital flows in so as to meet the challenges of development or at least move closer to a reasonable level of development.

But there are several questions relating to development. How do we measure the degree of development? How do we know that a country is developed or under development at any point of time? How do we compare the relative successes? To answer these questions we need a meaningful operational indicator of development for this purpose. Indicator of development may be simple and unambiguous only in a one commodity Robinson Crusoe economy. Then development means expansion of output to the individual. But as soon as we step into multiproduct economy with multitude of population indicator of development becomes a complex affair. Because production of some commodities may rise and that of some may fall. Similarly, some persons may gain and some other may lose. How can we determine whether the whole production has increased or decreased? How we assess the economic well being of the people?

1. Morris advocated the acceptance of physical quality of life index (PQLI) as a test of the degree of development. PQLI has three indices-literacy rate, infant mortality rate and life expectancy at the age of 1. Prof. Amartya Sen has been advocating two concepts which can be used as indicators of development. They are –capability and entitlement.