Chapter – 02 : Comparative Economic Development

Md. Mahbub Alam

Lecturer, Department of Economics
Stamford University Bangladesh,
51, Siddeswari Road, Dhaka -1217, Bangladesh
E-mail: mahbubalam13003@gmail.com
Contact:+8801738-704551, 01942353859

February 25, 2023

E P I D E M I C A L E R T A N D R E S P O N S E
 Contents
❖ Human Development Index (HDI)
❖ Indicators Human Development Index (HDI)
❖ Calculation of HDI
❖ Common characteristics of developing Nations
❖ Measuring inequality
❖ Size distribution
❖ Lorenz curves
❖ Gini Coefficients
❖ Functional Distributions

E P I D E M I C A L E R T A N D R E S P O N S E
 Chapter – 02 : Comparative Economic
Development
Human Development Index
● Initiated in 1990 and undertaken by UNDP in its annual
series of HDRs.
● An index measuring national socioeconomic development,
based on combining measures of education, health, and
adjusted real income per capita.

● HDI is based on 3 goals:

● Longevity

● Knowledge

● Standard of living

E P I D E M I C A L E R T A N D R E S P O N S E
 Calculation of Human Development Index

There are two steps in calculating the New HDI:

i. creating the three “dimension indices”; and
ii. aggregating the resulting indices to produce the overall New Human
Development Index (NHDI).

After defining the relevant minimum and maximum values (or lower and upper
“goalposts”), each dimension index is calculated as a ratio that basically is
given by the percent of the distance above the minimum to the maximum levels
that a country has attained.

E P I D E M I C A L E R T A N D R E S P O N S E
Indicators Human Development Index (HDI)

• The health (or “long and healthy life”) dimension of the New HDI
is calculated with a life expectancy at birth index, which takes a
minimum value of 25 years and a maximum value of 85 years (the
observed maximum value for any country).
• For example, for the case of Bangladesh this is:
1. Life expectancy index = 73.57- 25 / 85 – 25 = 48.57/60 = 0.81

E P I D E M I C A L E R T A N D R E S P O N S E
 Human Development Index (HDI)

E P I D E M I C A L E R T A N D R E S P O N S E
 Human Development Index (HDI)

E P I D E M I C A L E R T A N D R E S P O N S E
Common characteristics of developing Nations:
1) Low levels of living, characterized by low incomes, inequality,
poor health and inadequate education.

2) Low levels of productivity

3) High rates of population growth and dependency burdens.

4) Substantial dependence on agricultural production and primary-

product exports

5) Prevalence of imperfect markets and limited information

6) Dominance, dependence and vulnerability in international

relations.

E P I D E M I C A L E R T A N D R E S P O N S E
Chapter 3: Poverty, Inequality and Development

Measuring inequality:
1. Size distribution:
It simply deals with individual persons or households and the total incomes
they receive.

E P I D E M I C A L E R T A N D R E S P O N S E
E P I D E M I C A L E R T A N D R E S P O N S E
 Poverty, Inequality and Development
Measuring inequality:
Lorenz
• curves:
•The Lorenz curve shows the actual quantitative relationship between the
percentages of income recipients and the percentage of the total income they
did in fact receive during a giving year.

•The more the Lorenz line curves away from the diagonal (perfect equality),
the greater the degree of inequality represented.

E P I D E M I C A L E R T A N D R E S P O N S E
E P I D E M I C A L E R T A N D R E S P O N S E
E P I D E M I C A L E R T A N D R E S P O N S E
 Gini Coefficients and Aggregate Measures of
Inequality
Gini Coefficients:
• An aggregate numerical measure of income inequality ranging from 0
(perfect equality) to 1 (perfect inequality). It is measured graphically by
dividing the area between the perfect equality line and the Lorenz curve by
the total area lying to the right of the equality line in a Lorenz diagram.

• The higher the value of the coefficient is, the higher the inequality of
income distribution; the lower it is, the more equal the distribution of
income.

E P I D E M I C A L E R T A N D R E S P O N S E
 Gini Coefficients and Aggregate Measures of Inequality
Gini Coefficients:

E P I D E M I C A L E R T A N D R E S P O N S E
 Gini Coefficients and Aggregate Measures of Inequality
Gini Coefficients:

E P I D E M I C A L E R T A N D R E S P O N S E
 Functional Distributions
2. Functional Distributions:
▪The functional or factor share distribution of income, attempts to
explain the share of total national income that each of the factors of
production receives.
▪The theory of functional income distribution inquires into the
percentage that labor receives as a whole and compares this with the
percentages of total income distributed in the form of rent, interest
and profit.
▪Although specific individuals may receive income from all these
sources, that is not a matter of concern for the functional approach.

E P I D E M I C A L E R T A N D R E S P O N S E
Functional Distributions

E P I D E M I C A L E R T A N D R E S P O N S E
 Thank You

E P I D E M I C A L E R T A N D R E S P O N S E