Measures of Economic Development

Brief Outline:

Measures - Introduction

The world is often divided into two broad categories of countries:

  1. the More Developed Countries (MDCs), and
  2. the Less Developed Countries (LDCs)

Such a broad regionalization scheme is likely to be overly simplistic, yet it commonly used and it can be quite useful. Often different terms are used to describe each region. Think of other terms that you have heard to describe the MDCs and the LDCs. Then click here to see my list. One set of terms that is being used less and less is: First World Countries and Third World Countries - Why? Well, what is the Second World? How can you have a first and a third without a second? The Second World used to be the command economy (communist) countries of the Soviet Union, Eastern Europe, China, North Korea, Cuba, Vietnam, and a few other countries. With the collapse of communism in most of these countries the "Second World" no longer exists.

We learned in our introductory lecture that when geographers divide the earth into regions they do so based a a selected set of criteria. What criteria is commonly used to divide the world into the MDCs and the LDCs?

I have selected some of the most commonly used Measures of Economic Development. Carefully examine the maps of each measure below. Compare each map with the map of the world's realms [Realms]. Try to get a general idea of how the realms compare in terms of their level of economic development. First try to categorize each realm as either a More Developed or a Less Developed realm. Then try to rank them from the least developed realms to the most developed realms.

It should be noted that great disparities exist within realms and within individual countries. The author of your textbook therefore discourages the use of the terms MDCs and LDCs since there are highly developed areas and very poor areas within most countries. Nevertheless, the terms are commonly used and we should be familiar with their meanings AND THEIR GEOGRAPHY.


Measures of Economic Development

Here is my list of the most commonly used measures of economic development:

  1. GNP per capita
  2. Population Growth [wrpopgr]
  3. Occupational Structure of the Labor Force [wraglab]
  4. Urbanization [wrurban]
  5. Consumption per capita
  6. Infrastructure [wwtrans]
  7. Social Conditions


Definitions of the Measures of Economic Development


  1. GNP per capita
  2. Population Growth
  3. Occupational Structure of the Labor Force
  4. Urbanization
  5. Consumption per capita
  6. Infrastructure
  7. Social Conditions
    • literacy rate
    • life expectancy
    • health care
    • caloric intake
    • infant mortality
    • other


GNP per capita [wbgnpmap] [gnppctab.htm]

GNP is the total market value of all final goods and services produced by a country in one year. It is a measure of economic activity, or how much is produced in a country. The more that a country produces per person , the more "developed" it is assumed to be.

Which country produces more (has a higher GNP), India or Switzerland? Which is more "developed"?

The GNP of India is $336 billion and the GNP of Switzerland is $288 billion. India produces more than does Switzerland, but everybody would agree that Switzerland is more economically advanced. Why?

The answer is population. the population of India is 988 million and the population of Switzerland is 7 million. Therefore we must compare GNP PER CAPITA. To calculate GNP per capita (or income per person) we divide the GNP by the population. The GNP per capita of Switzerland is $40,630 and the GNP per capita of India is $ 340.

Remember, always use GNP PER CAPITA when comparing the economic conditions of different countries..

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Population Growth [wrpopgr]

In general, poorer countries have more rapid rates of population growth. Compare the following maps to verify that this general trend is true. You may have to go back a forth between them several times checking a different region of the world each time. [wbgnpmap] [wrpopgr]

After comparing the maps look here for a graph showing population growth rates by realm.[popgrrlm]

Even though population growth rates seem small (1%, 2% 3%, or maybe 4%) they have a big impact. a useful way to see this is by using the "Rule of 70". the rule of 70 is a way to ESTIMATE the number of years it takes for something to DOUBLE if you know the annual percentage growth rate. Therefore, the population of the United States with an annual population growth rate of 1% will double in about 70 years IF THE POPULATION GROWTH RATE REMAINS AT 1%. The population of the country of Mozambique, Southern Africa, with an annual population growth rate of 4% will double in 17.5 years, quadruple in 35 years and increase by a factor of 8 in 70 years IF THE POPULATION GROWTH RATE REMAINS AT 4%. So a small change in the population growth rate results in significant increase in population. You shoud now examine appendix A of your textbook and see how well the rule of 70 calculates the population doubling time. (Note: the textbook uses the rate of "Natural Increase" to measure the population growth rate.)

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Occupational Structure of the Labor Force [wraglab]

Economic geographers divide economic activities into primary activities, secondary activities, and tertiary activities. (Some add quaternary activities and quinary activities, but we will not.)

PRIMARY ACTIVITIES are those that directly remove resources from the earth. Generally they include AGRICULTURE, MINING, fishing, and lumbering.

SECONDARY ACTIVITIES involve converting resources into finished products. These are the MANUFACTURING activities.

TERTIARY ACTIVITIES comprise the SERVICE sector of the economy. The tertiary activities include retailing, transportation, education, banking, etc.

As countries develop the occupational structure of the labor force changes. In LDCs most people are engaged in primary activities. In high income countries like the United states most people are involved with the tertiary sector.

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Urbanization [wrurban]

Urbanization is the percentage of a country's population who live in urban areas. Urban areas generally means in towns and cities of 2,500 or more people. Currently just less than half of the worlds population live in urban areas. Generally as countries develop urbanization increases.

Note the high urbanization found in the more leveloped countries and in South America.

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Consumption per capita
[wwenergy] [wwtv] [wwconsmp]
Consumption per person is a good indicator of development. The richer a country is, the more its citizens consume. This map shows the energy consumption patterns for the world. Similar maps could be made for "televisions per capita" or "cars per capita".

One consequence of consumption is pollution [pop-co2-chart.jpg]. Carbon dioxide (CO2) is emitted when fossil fuels are used. Scientists are studying the connection between CO2 build up in the atmosphere ant global warming. this chart shows CO2 emissions for various countries

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Infrastructure [wwtrans]

A country's infrastructure is defined by our author as "the foundations of a society: urban centers, transport networks, communications, energy distribution systems, farms, factories, mines, and such facilities as schools, hospitals, postal services, and police and armed forces." (textbook page G-7).

This map shows the state of development of the transportation system as a measure of its length per area of land. The darker the color the more developed is the transportation system and hence, a greater the degree of economic development is assumed.

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Social Conditions

There are many other measures of economic development. Many refer to the social conditions of a country. Here is a short list.

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Human Development Index [HDI]

GNP per capita is the most used indicator of development yet there are some significant problems with it. Therefore, the United Nations Development Program (UNDP) computes a Human Development Index for each country each year. The human development index (HDI), composed of three indicators: life expectancy, education (adult literacy and combined secondary and tertiary school enrollment) and real GDP per capita. (Note: for our purposes, GNP and GDP mean the same thing and they are synonymous with income.)

To see the Human Development Index for individual countries go to:



Is it appropriate to divide the world into the More Developed Countries (MDCs) and the Less Developed Countries (LDCs)? As stated above the author of our textbook says no (page 29) since all countries have more developed and less developed areas and because the most commonly used measure of development (GNP per capita) masks the unequal distribution of income within a country. Yet, I believe that it is useful regionalization scheme since it is still used by so many people.

We also noted that there are several commonly used synonyms for MDCs and LDCs. Here is the list again.

Here is a map showing one view of the less developed world [LDC]. Note that regions are inventions of geographers and different geographers, using different criteria, may come up with different regions. Generally, most people would classify the following realms as LDC's:

  1. Sub-Saharan Africa
  2. South Asia
  3. Southeast Asia
  4. China *
  5. North Africa and Southwest Asia
  6. Middle America
  7. South America
  8. the Pacific Realm

The more developed realms generally include:

  1. North America
  2. Japan *
  3. Europe
  4. Australia / New Zealand
  5. Russia

* The author of our textbook includes the developing countries of China, Mongolia, and North Korea in the East Asian realm which also includes the industrialized country of Japan, and the Newly Industrializing Countries (NICs) of South Korea and Taiwan.

One final note: Is China an LDC or an MDC? Look at the data for China found in appendix A of your textbook. According to our measures of economic development China is definitely a less developed country with a GNP per capita of only $620.