4.2 Indicators of Economic Development

1. Economic: GDP/GNI per capita (with PPP adjustment for price differences); growth rate; sectoral composition (the agriculture→industry→services shift); capital formation. 2. Social/human: literacy and schooling; life expectancy; infant and maternal mortality; access to water, sanitation, electricity; the Human Development Index (health + education + income, since 1990); the Multidimensional Poverty Index; gender-parity indices. 3. Distributional: the Gini coefficient and poverty headcounts (4.5.1–4.5.2). 4. Sustainability: environmental indicators; "Beyond GDP" measures (Bhutan's Gross National Happiness the famous alternative). Limitations of GDP (always write two): ignores non- market work (household labour — half the economy and invisible); ignores distribution (a rising mean with rising inequality); ignores the environment (deforestation counts as output); and ignores the informal economy — large in Nepal. Exam line: GDP is a good measure of an economy's traffic, a poor measure of its travellers' welfare.