💰 Economic Indicators of Development
Economic development.
- GDP per capita — easily available, comparable across countries. BUT ignores distribution, informal economy, and non-market production.
- GNI per capita — used by the World Bank to classify country income groups.
- PPP adjustment — GDP/GNI figures adjusted for purchasing power parity allow fairer cross-country comparison by accounting for different price levels.
Qatar vs Norway: Qatar has one of the highest GDP per capita figures in the world, yet scores lower on many development indicators than Norway due to income inequality, migrant worker conditions, and limited political freedoms.
🏥 Health and Education Indicators
| Indicator | What it measures | Limitation |
|---|---|---|
| Life expectancy at birth | Overall health & quality of life | Averages — hides inequality, doesn't measure quality of life |
| Infant mortality rate | Healthcare quality, nutrition, sanitation | Affected by recording practices in different countries |
| Adult literacy rate | Basic education achievement | Doesn't capture quality of education or higher skills |
| Net enrolment ratio | Access to education | Doesn't measure learning outcomes or completion rates |
Every single indicator captures only ONE dimension of development. That's why economists use composite indicators that combine several measures.
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⚠️ Limitations of Single Indicators
- Averages hide inequality — GDP per capita may be high, but if most wealth is held by a few, the average doesn't reflect typical living standards.
- Ignore informal economy — in many developing countries, a large share of economic activity goes unrecorded.
- Don't capture well-being — GDP says nothing about freedom, happiness, environmental quality, or security.
- Data quality varies — some countries lack reliable census data or health-reporting systems.
- Snapshot, not trajectory — a single number doesn't show whether conditions are improving or declining.
In IB essays: always acknowledge limitations of the indicator you're using. Saying "GDP per capita is useful but limited because..." is exactly what examiners want.