Human Development Index (HDI) is defined as a summary measure of human development. This measures the average achievements in a country in three basic dimensions of human development (Meier and Rauch, pg. 5). The Gross Domestic Product (GDP), which is mostly used in the U.S. is the total final outputs of goods and services (value-added) produced with a country’s territory by residents and non-residents (Meier and Rauch, pf. 12). The two measures of development are two frameworks that document the financial flaws for all the countries in the world. Both frameworks are used to measure economic growth in terms of goods and services and to look at where to shift more focus to maintain good economic trends. But one form of measurement attempts to be more effective and allocates where and how the economic market can sustain growth.

            Human Development Index (HDI) measures capita per country. Based on the reading HDI calculates health, work/income and education. ” The HDI is based in a country’s per capita income, life expectancy and educational attainment and effort” (Meier and Rauch, pg. 2). This form of measurement was constructed to measure growth on the countries social and economic standards of living. This is for economic purposes to see the standards countries are using to attain growth and achieve maximum performance. HDI compares growth on international level. An example would be, ” The reason that weighting by population changes the growth rate so much in Exhibit I. B. 2 is that the two largest countries in the less developed world, China and India, began growing much faster than the typical LDC (Less Developed Countries) in the 1980s and 1990s (Meier and Rauch, pg.2). HDI identifies the type of development taking place based on the particular countries economic status. Also, this measurement tries to give an explanation of the paradox of poverty around the world, because many of these LDC countries have impediments to help them achieve a sustainable economy. To note, a number of these low-income countries have the least of equal distribution and are vulnerable to constant economic downfalls. “Endogenous growth theory has changed the relationship of development economic to the neoclassical mainstream, both by bringing ideas from development economics into the mainstream by allowing the mainstream to analyze economic growth in less developed countries more effectively” (Meier and Rauch, pg. 4).

            The Gross Domestic Product (GDP) measures a single country’s economic value, then that measurement is used to compare its economy with other countries internationally (Meier and Rauch, pg.12). The GDP uses a measuring tool call “Per capita”. “Per capita income is an average over all the residents of a country, and as such an obscure important regional differences” (Meier and Rauch, pg. 12). In the Unites States, the more affluent people help raise and maintain the countries social aspect but how the currency can continue to flow and who can continue to purchase and keep driving the economy up to avoid the economy falling into a pit. Based on an article published in the Bureau of Economic Analysis on December 21, 2017, ” The increase in real GDP in the third quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, non-residential fixed investment, exports, federal government spending, and state and local government spending that were partly offset by a negative contribution from residential fixed investment” (www.bea.gov). The one issue with measuring developing with GDP is it overlooks poverty, which is a component of social issues every country faces.

            The GDP captures the particular conditions of the economy of a country. It views all the ‘legal’ activities and where distribution of income is used to allocate wealth. This form of measurement is more effective because it separates the internal social issues and focuses solely on the monetary value, and the good and services that are being imported and exported. Although, HDI has a plethora of assets to show growth on an international level, but the observation of social issues included gives a look at the countries well being as a whole. As stated in the reading HDI uses more of a comprehensive approach, looking at all the elements. But I must add, despite not being the most effective to measure only the economy, HDI gives an overall understanding of a given area that is detrimental to the countries growth. To conclude, despite one measurement seemingly being more effective both tools are in favor of allocating development systematically.

 

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