Economic growth and human development

Economic growth allows improvements in the standard of living of the population. This is valid for most of the world’s developed countries, but does it also apply to less-developed countries? It could be argued that although economic growth is necessary for an economy, it is not always sufficient. In this article Peter Smith discusses why this is the case

economic growth, globalisation, income distribution and welfare, human development

The World Bank divides the countries of the world into categories based on the size of gross national income (GNI) per capita, measured in US dollars. GNI per capita represents the average income of the citizens of a country, but for a number of reasons this is not an ideal indicator. The level of GNI in a country is adjusted for population size, which is important. However, there are some problems, in particular associated with the translation of GNI from local currency into US$. The distortion introduced by this is offset by a conversion into international dollars (PPP$), which we will use from here onwards.