Meta Description: Per Capita Income has been of the major indicators of economic development for decades. Although there are others, it has remained the most effective.
Financial Intelligence: Per Capita Income as an Indicator of Economic Development
Per capita income is an economic indicator used in measuring the amount of money (or income) earned by each individual in a given society or country. It is one of the most effective ways to determine a people’s standard of living.
So, in this case, when the per capita income of the majority of the population living in a particular geography is low, it calls for attention and serious economic evaluation. This is to say, in essence, that the per capita income of a given society represents its standard of living. Again, a high per capita income in a country is also one of the most effective indicators of economic development.
How can Economic Development Be Measured?
The per capita income of a country can be gotten by dividing the total income of the country by its total population. So, for progressive economic development, every government, through its Ministry of finance and economic development (or equivalent ministries) introduce some favourable economic policies that will augment their citizen’s financial status.
In otherward, the bigger the citizen’s income, the higher their standard of living hence, the lower the poverty rate. A per capita income of a country is said to be best when it exceeds the country’s population. This is why it is advised that the government should provide more practical policies that ensure that the per capita income of an average individual in the country is constantly increasing even as the population keeps increasing. This is one of the basic justifications for a growing economy.
In another development, there have been assertions from different economic development analyst camps claiming that this economic indicator is no more relevant when measuring the economic development of a country. This, they believe is because of some unusual social and political factors like corruption, which usually change the measurement criteria for asserting economic development in such a country or region.
How Other Academia View Per Capita Income as an Indicators of Economic Development
This contradiction in the measurement of per capita income in those affected countries is said to be responsible for the high poor population even amid a suppose high GDP/per capita income. Some professionals believe that per capita income is another unfair method of measuring economic growth in any society.
This set of academia argued that the application of per capita income as indicators of economic development doesn’t shed enough light on the income distribution within a country. This is also another way of saying that per capita income does not represent justice and equity in any economic setting.
They also argued that if there is indeed equity in the distribution of income using per capita income as a criteria, it wouldn’t be affecting the gap between the high and the lower class, not even when there is an increase in the country’s GDP.
These sets of economists believe that the continuous usage of this indicator as a benchmark for measuring economic growth in a given society will end up making the rich richer and the poor, poorer – which can rightly be seen in the case of Nigeria and some other third-world African countries.
