Difficulties found in the Measurement of Economic in underdeveloped countries

Difficulties found in the Measurement of Economic in underdeveloped countries.

Development in Underdeveloped Countries

The measurement of economic development is really a difficult task. Every method faces many problems of its own. Let us explain these problems.

1. Lack of Statistical Data:

In order to measure economic development accurately, we should have correct assessment of national income, per capita income, per capita consumption etc. But in underdeveloped economies the correct data is not available. Due to lack of statistical data, it is difficult to assess economic development in such countries.

2. Controversy over National Income and Per Capita Income:

The economists differ over the issues whether to use national income or per capita income as the measure of economic development. In reality we require both of these measures.

If in two countries the national income is increasing at the same rate but in country A population is doubled whereas population remains the same in country B, in that case the per capita income in country B will reduce to half as compared to country A.

The national income measure will put both the countries at the same economic level. Therefore, we are required to know both these measures to assess economic development accurately.

3. Lack of Accurate Measure of Economic Development:

Another controversy arises over the accurate measure of economic development. Some regard national income and others regard per capita income as the suitable measure of economic development. These economists give importance to per capita consumption of electricity, food etc. There is no unanimity over the measure of economic development.

4. Difficulties in the Measurement of Living Standard:

Some economists favour living standard as a measure of economic development. But it is very difficult to determine which living standard is high and which is low. The living standard depends on the price level but not on income level. But this is not a good measure of economic development as it poses similar types of problems in its measurement.

5. Non-Economic Factors Ignored:

It is not only economic factors which affect economic development, but it is greatly affected by non-economic factors like social, political, religious, cultural etc. For determining economic development non-economic factors are indispensable. But the measurement of economic development does not take into account the non-economic factors.

6. Difficulties of International Comparisons:

There is no universal measure of economic development with the help of which international comparisons can be made possible