Meta Description: To an average economic development analyst, in the process of evaluating economic development, some economic development indicators are introduced into the scene.
There are different explanations for this, as modern economic innovation keeps changing the narrative. But as it stands, this term is associated with the measurement of macroeconomic performance, e.g., consumption rate, international trade, investment, and Gross Domestic Product (GDP). Other economic indicators include the balance of payments, money supply, and price of commodities in a given geography.
As we have earlier stated, the concept of economic development indicators varies, which is why you see different types of indicators from different investment management books. To some economic experts, there are three different economic indicators, while to others, there are about five.
No one can actually say how many of them are out there. In all of this, the best economic development indicators can be gotten from the citizen’s standard of living, otherwise known as Per Capita Income (PCI) or Physical Quality Life Index.
To an average economic development analyst who believes in evolutionary economics, Per Capita Consumption (PCC) is seen as one of the most effective economic development indicators in the 21st century.
Uses of Economic Development Indicators
Countries and cooperations around the world have used economic development indicators as a major tool for economic growth and development for decades. Like most economic indicators, this one hardly gets obsolete, instead, it gets updated to fit modern trends and also solve major economic problems.
Below, we have briefly listed some of the major advantages of some of these indicators of economic development.
1. Understand Different Economic and Social Situations
It is a good way to understand the developmental pattern of any country’s economy. With this in mind, one can easily tell how an average citizen of a country lives or feel in a time of lack or abundance. For instance, since the war in Ukraine started, UK inflation is reported to have climbed from 0.85% in 2020 to 6.7% in 2023.
So, with the application of an economic development indicator like the Per Capita Income using the same year, an average UK resident earned between £37.660,54 ($45,960) in 2020, and £8,265 in 2022 (source: Statista). This indicator simply means that an average UK resident is living with a lower income since the war started.
2. Creates are Perfect Avenue for Comparison
We live in a world where you will be left out if you are ignorant of what your neighbours are up to, and this is where comprehensive economic development indicators come in. When applied, countries should be able to compare the extent of development happening in a particular sector of a country with theirs. This will enable them to fast-track their progress in the development of that sector. This comparison comes with statistical analysis and must be relevant for it to be effective.
3. Used As a Ranking Criteria to Allocate Aids
Almost all international aid agencies consult the economic development indicators of the countries they wish to send aid. This report will show them how many people are suffering from a particular alignment, how many people need food, good education, etc. They rank them according to priority before allocating whatever aid they must have had for them.
Final Thoughts
Countries have come to realize the need for comprehensive economic development data, which can only be gotten through well-established indicators. Most of these countries go as far as creating a ministry of finance and economic development to better manage the operations contained in these indicators.
Finally, even with the existence of ten economic indicators, chances are that there is the possibility of more of them getting introduced into the system because of the ever-changing economic atmosphere
