How can you measure economic development in low-income countries?

2 HDI and MPI

Another approach to measuring economic development is to look at the human development index (HDI), which combines three dimensions of well-being: health, education, and standard of living. The HDI is calculated by taking the geometric mean of three indicators: life expectancy at birth, mean years of schooling, and gross national income per capita. The HDI ranges from 0 to 1, with higher values indicating higher levels of human development. However, the HDI also has some limitations, as it does not capture the inequality, diversity, or sustainability of human development. A more comprehensive measure that addresses these gaps is the multidimensional poverty index (MPI), which identifies the deprivations that people face in 10 indicators across three dimensions: health, education, and living standards. The MPI ranges from 0 to 100, with higher values indicating higher levels of multidimensional poverty.

3 ICI and GII

Another way to measure economic development is to focus on the institutional and governance aspects of a country, such as the quality of democracy, rule of law, human rights, and gender equality. One of the indicators that reflects these aspects is the Ibrahim Index of African Governance (IIAG), which assesses the performance of 54 African countries in four categories: safety and rule of law, participation and human rights, sustainable economic opportunity, and human development. The IIAG ranges from 0 to 100, with higher values indicating better governance. Another indicator that evaluates the gender dimension of economic development is the gender inequality index (GII), which measures the gap between women and men in three areas: reproductive health, empowerment, and labor market participation. The GII ranges from 0 to 1, with higher values indicating higher levels of gender inequality.

4 SDGs and EPI

A final method to measure economic development is to consider the environmental and sustainability aspects of a country, such as the impact of economic activity on natural resources, biodiversity, and climate change. One of the frameworks that guides the global efforts to achieve sustainable development is the Sustainable Development Goals (SDGs), which consist of 17 goals and 169 targets that cover a wide range of social, economic, and environmental issues. Each country is expected to monitor and report on its progress towards the SDGs using various indicators and data sources. Another indicator that measures the environmental performance of a country is the Environmental Performance Index (EPI), which ranks 180 countries based on 32 indicators across 11 categories, such as air quality, water quality, biodiversity, and climate change. The EPI ranges from 0 to 100, with higher values indicating better environmental performance.