In India, we are proud of our Gross Domestic Product (GDP) growth rate. We have been boasting a high growth rate for several years now and the results are visible on the streets of our metropolitan cities. We have glittering shopping plazas, restaurants, multiplexes and a section of the Indian kids love to hang out at the McDonalds and KFCs that are mushrooming across the cities. However, there is another section of Indian kids whom you will find working as daily wage earners in the small stalls near the same McDonalds and KFCs!
I feel development is an improvement in the welfare of human beings. Using GDP growth rate, we can explain the improvement in the man-made capital (economic capital). However, we will not be able to explain the improvement, if any, in the human capital. To measure the quality of life we have to use the Human Development Index (HDI) – HDI takes into account life expectancy, literacy and GDP per capita.
In an English proficiency test, if we were tested only on our essays, it would make sense to focus our time and energy on improving our writing skills alone. Although we may not be good at speaking the language, we wouldn’t work on that, because it will not show up on our score sheets! This test therefore provides an inaccurate evaluation, as a candidate needs to be judged on his speaking, reading and listening skills in order to provide the right evaluation (as in tests like TOEFL and IELTS).
Similarly, unless we have a proper indicator for development, our politicians and policymakers will concentrate only on increasing the man-made capital (reflected by the GDP) to deliver results, but our citizens will continue to be illiterate, health services will continue to be inefficient and we will keep suffering from pollution-related diseases.
Recently, we have been trying to go a step further. Both GDP and HDI do not talk about our natural capital. Our man-made and human capital may increase but this can be at the cost of our natural and environmental resources. So, from HDI we should move on to another indicator of human development, which will take into account our environmental concerns.
As mankind progresses, our tools for measuring this progress also have to improve and be more efficient. No indicator can be perfect, but we have to keep improving them so as to get a more accurate picture.