The Human Development Index Is a Better Measure of Economic Performance Than GDP Per Capita

Decent Essays

I will advance the thesis that the Human Development Index (HDI) is a better measure of economic performance than the Gross Domestic Product (GDP) per capita. By saying that the HDI is a better system to measure economic performance, I mean that because the HDI highlights the trend between longevity, education and economic growth, it calculates a better analysis of an economy (Costa, Steckel 1997, p. 71). In contrast, the GDP per capita only accounts for the gross domestic product without paying any attention to other factors of an economy (Hawthorn, Sen 1997, p. 60). With this being said, my thesis asserts that the HDI is a better measure for economic performance because it considers significant factors that play large roles in an …show more content…

As I just defended the importance of considering longevity in an economy, I will now explain why it is imperative to consider education when calculating the development and performance of an economy. To begin, when a population is educated they will have the opportunity to adapt new technology and new ideas to enhance their productivity and output, which is an essential part of competing against other economies in the international arena. To be more specific, when a population is able to adapt new technology and idea they increase their speed of production, which, in turn, increases their output, which means, in simple terms, new technology and ideas increase an economy’s growth because it allows them to produce more, faster and trade more, faster. This is best explained in Invest in Humans, Technological Diffusion, and Economic Growth that says, “the better educated farmer is quicker to adopt profitable new processes and products since, for him, the expected payoff from innovation is likely to be greater and the risk likely to be smaller; for he is better able to discriminate between promising and unpromising ideas, and hence les likely to make mistakes (Nelson, Phelps 1966, p.70)”, while the less educated farmer is prudent to delay the introduction of new technology until he has concrete evidence of its profitability, which is often from his

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