ECON 102

QUIZ NO. 1 (Final Term)

Instruction. Read and follow instructions.

Rubrics: 20 – Explained clearly and presented thoroughly with complete data.

16 – Explained clearly and presented thoroughly with incomplete data.
14 – Not thorough explained with incomplete data.
12– There was an attempt to explain but not thoroughly explained.
8 – There was an attempt to explain but no idea was presented.

1. Write an “Essay” on the following indicators of economic development. Your

essay on each indicator should have 400 words only.

a. Social Indicators

Social indicators are data representing social characteristics of population that

can be used to measure the welfare. From qualitative point of view, they represent
societal well-being that is not limited to economic evaluations. Social indicators provide
a standardized way to capture and compare information about society irrespective of
differences in national definitions and classifications.

Social Indicators Approach had the following context included: Population, Family
formation, Families and households, Learning and educational services, Learning
activities, Distribution of income, Consumption and accumulation, social security and
welfare services, health service and nutrition, Housing service and its environment,
Public order and safety: time use, Social stratification and mobility.

As social development goes hand in hand with economic development, it makes

sense to complement income-based measures of well-being with indicators that reflect
the non-material dimensions of human life. Social indicators describe living conditions,
social organization, culture, and other attributes of society and are intended to
supplement the standard measurements of economic progress—gross domestic
product (GDP), per capita income, or consumption.

Social development is not only about improving human welfare but also
augmenting individual autonomy. The ultimate benchmark for any kind of development
activity should be whether it encourages citizens to enjoy a life of their own choice and
fosters the conditions for them to live with dignity. Therefore, social indicators can be
considered as instruments for increasing the level of individual freedom in society,
enhancing opportunities open to everybody and strengthening democratic governance.

Social indicators are important for several reasons. First, social development is
not comparable across countries or over time where standard economic measures like
per capita income and consumption fail miserably. Building on the experience of
industrialized economies, traditional economic growth appears inadequate as an aim of
economic policy in developing countries. Rather it should be viewed as an intermediate
step toward broader social objectives.

Therefore, development depends not only on the level of income per capita but
also on other conditions and indicators that include health care, education, political
participation, and cultural traditions. Social indicators help to monitor societal
dimensions and evaluate social progress in a comprehensive way. The following are
some of the common advantages of using social indicators to measure development
progress.

Social indicators are crucial in identifying various forms of poverty, social

exclusion, and deprivation on the basis of gender, the ethnicity, or the civil status such
as old age that might be missed by conventional economic measures.

b. Human Development Index

The Human Development Index (HDI) is a summary indicator of average

achievement in key dimensions of human development: a long and healthy life, being
knowledgeable, and a decent standard of living. It is used to rank countries into four
tiers of human development based on their scores in the three basic indicators –
longevity, knowledge, and income.

Human development is the process of enhancing the quality of life, i.e. by

increasing people's opportunities and capacities to live long, healthy, and creative lives.
This is done through expanding choices in primary aspects of social and personal life –
economic prosperity; political self-determination; freedom of expression; health;
education; family matters (which includes marriage, birth control, and child care); living
standards; social participation; gender equality; and environmental sustainability.
 Human development differs from quality of life, in that the concept does not judge
the "achievement" of states or individuals based on subjective indicators, such as
happiness and satisfaction – which are often dependent on economic growth. Rather, it
relies on extensive empirical evidence from survey results and statistical associations.
The HDI is a summary measure that takes into account average achievement in three
basic dimensions of human development: A long and healthy life (as measured by life
expectancy at birth); Knowledge and a decent standard of living (as measured by mean
years of schooling attained).

The HDI is the geometric mean of normalized indices for each of the three
dimensions. The life expectancy index is based on life expectancies at birth in a given
country or region. The education index is based on expected years of schooling from
age 5 and again taking into account differences in adult and youth literacy rates by sex.
Finally, the standard of living index is based on per-capita expenditure, adjusted for
personal purchasing power parity (PPP) across countries, and weighted for regional
differences in the cost of living.

The HDI is used to rank countries into four tiers of human development: Very
High, High, Medium, and Low. This classification is not a statement about the level of
development that a country has achieved, but rather an indication of where it stands in
relation to other countries. It provides a comprehensive picture of "human capital ", the
state of development of health, education, and income in a country at any point in time
and therefore a useful tool for the policy-makers when making decisions regarding
international development aid allocations to specific countries.

c. Basic Needs Approach

A Basic Needs Approach (BNA) to economic development is one that addresses

the needs of poor people. "Basic needs" are defined as food, clothing, shelter, and other
material items required for survival. Economic development is a process whereby
communities move from subsistence production to cash-producing activities in return for
money or other kinds of currency.
BNA is a school of thought in social sciences that discusses how we can help
communities address the needs of poor people. BNAs are most common in international
development circles, but social scientists have also developed BNA approaches to
national economic development and community development.
Basic Needs Approaches have been primarily applied to rural areas and small
towns/villages. However, there are some examples of BNAs being applied in urban
areas.
In Southeast Asia, the Asian Development Bank uses a Basic Needs Approach
to guide its interventions for poor communities through what they call the "Basic
Services Program." The program has had good results in increasing access to health
and education services. According to ADB, “the program is designed to bring concrete
improvements in the lives of poor people through investments in basic services plus
strengthening government capacity and accountability.” ADB also uses a Basic Needs
Approach to help address poverty issues among the ethnic minority populations,
women, and children.
Basic Needs Approaches also ignore structural inequalities that poor people face
and marginalize them from playing a role in social change. The basic needs approach is
an attempt to create a road map for the development that focuses on improving the
quality of life as opposed to the economic growth and the "income" side of life. Despite
being hundreds of years old, this idea has never been fully implemented since humans
have always been interested in increasing the material goods available to them.
The idea behind this approach is simple – providing basic services such as clean
water, food security and shelter would uplift individuals from poverty. Basic needs
initiatives have historically focused on two themes: first, they have encouraged people
to look at the quality of life in terms of basic services and amenities; second, they have
emphasized making available these basic necessities to all members of society.
However, it is important to note that the approach does not discard economic growth
altogether as the basic needs approach allows for a moderate level of economic activity
which can help in the provision of the basic services.
 d. Economic Indicators

Economic Indicators in economic development are the statistics that reflect the
health or level of activity in an economy along with its direction and future trends. The
international organizations, such as International Monetary Fund (IMF) and World Bank
produce such statistics regularly. Some national governments publish their own
economic indicators for social and business analysis also.

There are many of these economic indicators in economics. The most popular
and the important economic statistic is the Gross Domestic Product (GDP) or gross
national product. It measures the total market value of all goods and services produced
within a country in a year's time period. GDP includes income earned by the citizens of
that country as well as it includes the income earned by foreigners that are within the
boundaries of the country. The economic indicators are the data produced that shows
economic activity in a country and are used to analyze trends, production, or other
aspects of the economy. This can include, for example, employment rates, GDP growth
rates, and spending habits. The purpose of economic indicators is as an efficient tool to
assess current conditions and progress within a country's economy.

Also, the indicators give relevant and exact information on the current state of
activities and developments happening in the country or a place in particular. Most
importantly, these indicators also forecast future trends in certain fields. They may be
used for the current observations of change in the economy or industries, activities, and
developments of the country as a whole. The most popular economic indicators are
GDP, inflation rate, unemployment rates, and the others related to consumer behavior,
production techniques, and investment trends.

Economic indicators generally may reflect a country's level of activity that is

currently happening within the economy. These statistics also show the shifting trends
towards certain levels or types of economic activities and other related issues. The use
of economic indicators is derived from the need to act quickly in developing countries.
When a country begins to experience trouble with one or more aspects of its economy,
it is crucial that action be taken immediately and accurately. Therefore, the government
in charge needs an effective method for gathering information about its economy for the
purposes of implementing a solution to the problem. Economic indicators are one way
that this data can be collected and analyzed in order to determine what type of policy
should be implemented.