Single Indicators:

1. GDP per capita/ GNI per capita:

GDP per capita: total output of all economic activity divided by population. Incomes of foreign companies in country included

GNI per capita: Total income earned by country’s residents regardless of the geographical location divided by population

These measures are sometimes represented in purchasing power parity: This exchange rate equates the purchasing power of different currencies. > Helps in making financial comparisons between countries

Limitations

• Does not account the value of economic degradation associated with economic activity. Economic activity> degradation> health risks> degrade quality of life
• Fails to account non marketed output> subsistence which is significant in developing countries.
• Moreover fail to take into account informal economy> large proportion of output in developing countries, understates living standards

Other limitations are mentioned below

1. Health indicators: life expectancy at birth, infant mortality, maternal mortality
   • Since GDP/GNI measures cannot indicate heath outcomes accurate> high GDP capita does not mean longer life expectancy, or…
   • Health indicators must be used in conjunction> to accurately asses development
   • Countries with low GNI per capita can improve by allocating resources towards social and merit goods
2. Education Indicators: adult literacy, primary/secondary enrolment
   • GDP figures fail to account for quality of education. High GDP does not mean high adult literacy rates
   • This indicator should also be used in conjunction
   • Countries with low GDP per capita can improve by allocating resources towards merit goods
   • Countries with high GDP may have low adult literacy rates due to high income inequality> or low levels of govt provision
3. Income inequality indicators: Lorenz curve, Gini coefficient, poverty, minimum income standards and multidimensional poverty index
   • Fails to incorporate income distribution> the figure is an average and doesn't tell us whether income is equitably unequally distributed
   • Used in conjunction
   • Can be improved using redistributive policies> progressive tax, transfer payment

Composite Indicators

1. Human Development index:

Measures average achievement in three dimensions: GNI per capita(PPP)+ Life expectancy+Mean expected years of schooling. Highest 1 lowers 0

• Superior to single indicators> measures three dimensions
• Shows economic development can be achieve without increasing GNI per capita with just allocating twoars educatin
• However, its still an average figure> masks inequalities in a country between rural urban, ethnicities, etc