We live in a world of extreme contrasts where wealth and poverty coexist.

Some countries are

affluent, with an abundance of resources, income and so forth whilst the flipside shows
enormous shortages in others. Internally, any country can be the breeding ground for poverty
and sometimes there exists extreme wealth in conjunction with poverty to create economic
inequalities. Subsequently, developmental economics serves to address such issues as a
promoter of economic development. Over the years as this branch of economics has
progressed, a number of statistical indicators and analyses have been developed to assess the
performance of various economies of countries. Some of these criteria are strictly economic
in nature while others are social. Together, these indicators furnish economists with valuable
information about economic performance and the well-being of members of the country so
that appropriate interventions, if necessary, must be taken to eradicate any problems.
For this data response project, five scenario countries with their corresponding indicators
were provided. In keeping with the question, I will:

highlight how the goals of development according to the basic needs approach impact
on the weighting of the individual indicators.
using the above weighting, determine the rank of each country from most developed
to least developed.

The overall goal of development is to realise a sustainable increase in living standards for all
while acting as a multidimensional process through structural and institutional
transformations of entire economic societies in a manner that will most efficiently bring the
fruits of economic and social progress to the broadest segments of the population (Todaro and
Smith, 2003:9). According to the basic needs approach, development can only exist if a
holistic approach is undertaken that encompasses economic growth, redistribution efforts as
well as procurement of basic needs. This approach shows a strong correlation with the
Human Development Index (HDI) which was created through the UN Development
Programme, as both articulate real incomes per capita as a primary objective to development
followed by access to public services such as education and health care. These cornerstones
will act as the basis or foundation for how I will weigh each specific indicator in relation to
each other.
In Economics, it is very difficult sometimes to evaluate data in isolation. Therefore, I have
decided to weight the indicators provided, into four groups starting from the most influential
in quantifying and measuring development to the least influential in order to assist in
assessing the development status of each scenario country:
1) Real Gross Domestic Product per capita (in US$) and Gini Coefficient
2) Literacy Rate and Engineers per 1000 population
3) Life Expectancy (years) and Infant mortality rate (death per 1000 population) and
4) % Primary sector contribution to GDP.

It must be noted that the weighting is purely subjective and can be expressed and grouped in
different ways. I have decided to group and list them in the above way because it follows the
order of economic growth and income redistribution as a primary objective of development
followed by education, then health linked to survival capability and lastly the structural
diagnostic of an economy.
The reason why real GDP per capita is weighted so heavily is because when an economy is
growing, the real GDP per capita improves provided the economic growth rate is greater than
the population growth rate which implies that the material standard of living of people,
directly associated with this indicator, has improved. This is imperative because if more
goods are being produced, then more people can be employed leading to higher income
levels. These strategies to raise the income levels of the poor would therefore contribute not
only to their material welfare but also to economic productivity. In other words, we are more
likely to help poor people in an environment in which the economy is growing because this
will enable us to fund our development interventions like education and healthcare
procurement.
However, the real GDP per capita has a shortfall in that it assumes that the income is
distributed evenly throughout the population which is most likely not to the case. Therefore,
it is important that the real GDP per capita be analyzed in conjunction with the Gini
coefficient that serves as a verification which measures income inequality ranging from 0 to 1
where 0 represents perfect equality and 1 represents total inequality. This indicator shows
how equally income is distributed within an economy for e.g. if the distribution is closer to 1,
this tells us that the poor people which make the majority of the population are not in a
position to save because of their low incomes and cannot invest in their productive capacity
through education which leads to lower economic activity and development.
Secondly, education directly influences your level of income and therefore your standard of
living . The level of education of the population is directly related to the countrys level of
productivity, competitiveness and national wealth. The level can be measured through the
adult literacy rate which is the percentage of people above the age of 15 who can read and
write with understanding. Fundamental to the developmental initiatives, is the fact that
education equips humans to enter into highly skilled jobs like medicine, business and
engineering that focus on helping improve the quality for the rest of society e.g. for instance
without medical doctors and researchers, we would not be able to enhance the overall health
system of economic societies. One of the statistics provided, is the number of engineers per
1000 people of the population which serves as an indicator of how skilled the workforce of
the economy really is because engineers serve to find solutions to problems within society.
Thirdly, health serves as an important factor as its economic impact is felt in terms of labour
productivity because when a workforce is hampered by illnesses, economic activity is thus
hindered and therefore it is imperative to have a sound health system in place. Indicative of
the quality of health system, is the life expectancy which measures how long a person would
be able to live from the time of birth in a particular set of conditions in the country of birth.
Also, there is the infant mortality rate which tells us the number of babies who die before

reaching the age of one year old for every 1000 live births. These statistics are powerful in
terms of identifying how sound not only the health system is but also to an extent the safety
and security provisions of a country in order to ensure a peaceful and prosperous life for the
population.
Lastly, economists have emphasized the structural changes which need to occur in a country
for economic development to take place. Economic development normally is linked to the
declining importance of the primary sectors (mining and agriculture) and the rising
importance of the manufacturing but more specifically the services sector. In this case with
the statistics provided, the lower the percentage primary sector contribution, the more
developed the country is, ceteris paribus.

TABLE: RANK OF EACH SCENARIO COUNTRY BASED ON

WEIGHTING SYSTEM

RANK
1

COUNTRY
NAME
C

REASONS FOR SPECIFIC RANK

This country excels in every development indicator as it has the

best performance relative to the rest of the countries.
Corroborating this, is the fact it has the best GDP/capita of $35000
which according to the World Banks classification system in 2005
confirms that this country is developed and can be termed a high
income country.
The Gini coefficient of 0,29 is the lowest of the group and is very
good which confirms that the income is distributed fairly well.
The second confirmation for this position is that the literacy rate of
99% is close to perfect and the engineers/1000 population of 62 is
very promising as it provides verification that the education system
is empowering the population to educate themselves and allowing
them to broaden their skills base.
A life expectancy of 81 years and infant mortality rate of 1 per 1000
population is very good as it shows promise in the fact that through
the healthcare system, people are able to live healthy and long lives
within an environment that allows them to generally feel safe and
secure.
The percentage primary sector involvement of 6 % suggests that
country C has placed a greater emphasis on the manufacturing and
services sector involvement as part of the contribution to GDP
which shows that its development status is in line with how a
developed country should operate in the economic times of these
days.

Country C will probably be ranked as a highly developed country

with a Human Development Index (HDI) greater than 0,8.

In terms of the weighting system, country E has the third highest

GDP/capita of $16000 after country A. However, country E, in my
opinion, was ranked better because the Gini coefficient of 0,37 was
far better than that of country A and was slightly better than the
remaining two countries. From a developmental economic
perspective, one rather live in a country where there is an adequate
GDP/capita and a very good income distribution than in a country
that has an excellent GDP/capita but extreme income inequality.
The literacy rate is very good at 96 % and is the second highest of
all the countries. Even though the engineers/1000 population is
measured at 16 and is the third highest after country D, I believe
that by the country having a high literacy rate through an effective
education system, people could possibly occupy alternative highly
skilled jobs like doctors, accountants etc. and not being merely
restricted to engineers.
A life expectancy of 65 years and an infant mortality rate of 4 per
1000 live births make this country the second best in this category.
Overall, there is sufficient justification for country E to be called
the second highest developed country.

Even though the GDP/capita of $15 000 is lower than country As

amount but much higher than country Bs amount, country D still
has the best income distribution of 0,43 out of the remaining
countries ( D, A and B) and overall has the third best in this
category. This income distribution still indicates that the income is
distributed adequately but there is the existence of income
inequality which is more of a moderate nature instead of an extreme
one.
The literacy rate is still very high at 90 % even though it is the third
best and this is substantiated by the second best engineers/1000
population figure of 31. This shows that the educational system has
proven quite successful in terms of empowering people to improve
their standard of living.
Country D has the third best life expectancy (59 years) and infant
mortality rate (17 per 1000 live births) which is still quite good
however reasons for such occurrences much be investigated and
measures must be implemented to ensure that these figure improve
in the future whether it be through medical research or through the
development of a better social and security system.

The percentage primary sector involvement of 18% is the second

best however because it is the lowest weight in terms of the
indicators it could not take preference over country Es one of 21%
with such a small gap separating them. Nevertheless, country D still
exhibits a developed country that has placed emphasis on its
manufacturing and services sector which shows encouraging signs
of economic development.

To determine this rank and the following one, direct comparisons

were necessary to determine the rank of the remaining two
countries.
Country A has a very good GDP/capita of $25000 which makes it a
high income country according to the World Banks domestic
income classification system. On the other hand Country B had a
GDP/capita of $2700 which makes this country a low income and
less developed country (LDC) according to the World Bank. It is
concerning that the Gini coefficient for A is not satisfactory as it is
very close to 1 and therefore redistribution policies need to be
implemented to improve the income inequality situation.
The literacy rate of 70% and engineers/1000 population of 10 is far
better than that of country B which means that this country has a
better educational system.
Although the life expectancy of 46 years is slightly lower than
Country B, the infant mortality rate of 60 for A is slightly better.
Therefore the final determining factor was the fact that As
percentage primary sector involvement of 27% was 11% better than
that of B and was the 4th best overall.

Now that every other country has been ranked, by common sense,
country B has to be classified as the least developed country.
This country has the lowest figures in the following categories:
GDP/capita - $2700
Literacy Rate 55%
Engineers/1000 population 1engineer
Infant mortality rate 64 per 1000 live births
% Primary Sector Involvement 38%
Certainly if this country has the lowest in the majority of the
categories, by inference, it has to be the least developed country
overall. Therefore, economic development policies need to be
embraced in order for this country to become highly developed as it
would probably be classified as a country with low to medium
development on the HDI. It is imperative that the government

understands that by understanding economic development is a

multidimensional process, in such time will the welfare of the
nation improve if an effort for improvement is made.

Economic development indicators as a whole play an important role in assisting economists

in determining the development status of a country. Once sufficient information can be
gathered about a countrys economic status, development policies need to be implemented
and/or maintained in order to ensure that its status is improved or maintained at a high level.
The South African approach to economic growth and development is contained within the
policies of the Reconstruction and Development Programme (RDP); the Growth,
Employment and Redistribution Programme (GEAR); and the Accelerated and Shared
Growth Initiative for South Africa Programme (AsgiSA). These approaches followed in
South Africa are undertaken to increase the economic growth rate and to achieve economic
development by trying to ensure that the fruits of economic growth improve the livelihoods
of all South Africans.