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2.1 How do we measure the economic performance of developed and developing countries?

What students need to learn:

Students should be able to:
Additional Guidance Notes
Economic growth
Understand how economic growth is measured and its limitations, for example:
  • the inadequacy of economic growth measurement as a measure of standards of living
  • problems of comparison between developed and developing countries.

An understanding of the following distinctions is required:
  • nominal and real
  • total and per capita
  • volume and value.

Students are not expected to have detailed knowledge of GDP calculations or the GDP deflator.
Understand the process of calculating the rate of inflation in the UK.

Understand the significance of the measure.
Increases in the cost of living are measured using an index based on a weighted basket of goods and services. A price survey and a family expenditure survey are used.

Students are expected to be able to assess the main measure of inflation currently used as a target in the UK.
Employment and unemployment
Understand how unemployment is measured in the UK.

Understand the types and costs of unemployment.

Understand the significance of changes in the rates of employment and unemployment.
An understanding of measures to measure unemployment such as the claimant count and International Labour Organisation (ILO) measures is required.

The significance of migration for employment and unemployment should be considered.
Balance of Payments
Understand the meaning of Balance of Payments deficits and surpluses on the current account.

Understand the causes and costs of an imbalance in the current account, at a basic level.
For this unit, emphasis will be on the current account of the Balance of Payments and, in particular, on the balance in trade in goods and services.
Measures of development
— Human Development Index (HDI)
Understand the advantages and limitations of HDI in making comparisons of living standards between countries.
Students should know the three components of HDI and should to be able to interpret HDI data. A definition of Purchasing Power Parities (PPPs) is helpful. Students are not expected to
know how HDI is calculated,
such as the mechanics of PPPs.
Other measures of development
Interpret and use other measures of development. For example:
  • the percentage of adult male labour in agriculture
  • combined primary and secondary school enrolment figures
  • access to clean water; energy consumption per capita
  • access to mobile phones per thousand of the population.
Students are not expected to know specific figures for various countries but may have to make comparisons between data provided for various countries.

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