World Development Indicators

The World Development Indicators (WDI) is the primary World Bank

collection of development indicators, compiled from officially-recognized
international sources. It presents the most current and accurate global
development data
available,
and
includes
national,
regional
and global estimates. This statistical reference includes over 800 indicators
covering more than 150 economies. The annual publication is released in
April of each year. The online database is updated three times a year.
The World Development Indicators are categorized under different
topics for easy to understand and coverage. They are:

Agriculture and rural development

Economy and growth
Social development
Environment
Financial sector
Energy and mining
Health
Infrastructure
Poverty external debt
Gender
Private sector
Public sector
Science and technology
Social protection of labor
Climate change
Trade
Urban development
Education
Aid effectiveness

These categories are divided into relevant indicators so easily can

access. Here, data of top 50 countries have been taken for indicators Gross
Domestic Product (GDP), Gross national Income Per Capita, Human
Development Index (HDI), Infant mortality rate, Life expectancy at birth,
Population, literacy, Inflation and unemployment.

Gross Domestic Product

Definition
An aggregate measure of production equal to the sum of the gross
values added of all resident institutional units engaged in production (plus
any taxes, and minus any subsidies, on products not included in the value of
their outputs).
GDP can be determined in three ways. They are

The production approach

The income approach
The expenditure approach

The more familiar use of GDP estimates is to calculate the growth of the
economy. The pattern of GDP growth is held to indicate the success or
failure of economic policy and to determine whether an economy is
in recession.
The level of GDP in different countries may be compared by converting
their value in national currency according to either the current currency
exchange rate, or the purchasing power parity exchange rate.

Gross National Income Per Capita Income

Per-capita income is the overall income of a population divided by the
number of people included in the population.
Current currency exchange rate
Current currency exchange rate
international foreign exchange market.

is

the exchange

rate in

the

The current exchange rate method converts the value of goods and
services using global currency exchange rates. The method can offer better
indications of a country's international purchasing power.
Purchasing power parity exchange rate
Purchasing power parity exchange rate is the exchange rate based on
the purchasing power parity (PPP) of a currency relative to a selected
standard (usually the United States dollar). This is a comparative exchange

rate. The ranking of countries may differ significantly based on which

method is used.
The purchasing power parity method accounts for the relative
effective domestic purchasing power of the average producer or consumer
within an economy. The method can provide a better indicator of the living
standards especially of less developed countries, because it compensates
for the weakness of local currencies in the international markets. It also
offers better indication of total national wealth.
Reasons for fluctuations in GDP and Per Capita income
The production function tells us that if we know four thingsthe size
of the workforce, the amount of physical capital, the amount of human
capital, and the level of technologythen we know how much output we are
producing. When comparing two countries, if we find that one country has
more physical capital, more labor, a better educated and trained workforce
(that is, more human capital), and superior technology, then we know that
country will have more output.
Differences in these inputs can be observed. Large countries obviously
have bigger workforces than small countries. Rich countries have more and
better capital goods. In the farmlands of France, tractors and expensive
farm machinery are used, while plows pulled by oxen in Vietnam; in Hong
Kong. Similarly, rich countries often have well-equipped schools,
sophisticated training facilities, and fine universities, whereas poorer
countries provide only basic education. We want to be able to say more,
however. We would like to know how much these different inputs contribute
to overall economic performance.
The United States, India, and Niger differ in many ways. One is simply
the number of people in each country. The workforce in the United States is
about 150 million people. The workforce in India is more than three times
greaterabout 478 millionwhile the workforce in Niger is only about 5
million people. Thus India has much more labor to put into its production
function than does Niger.
Differences in education and skills certainly help to explain some of
the differences among countries. Researchers have found evidence that
measures of educational performance are correlated with GDP per person.
The causality almost certainly runs in both directions: education levels are

low in Niger because the country is so poor, and the country is poor because
education is low.
Vicious circle of poverty is the largest reason of low per capita
income. Developing countries including Pakistan are trapped into VCP. A
poor country is poor forever due to the VCP. 21.0 % population is very
poor population in Pakistan.
Unemployment is the major cause of low per capita income.
Unemployment means no source of income and result is low per capita
income.
Due to backwardness, political instabilities and improper availability
of infrastructure the attraction for foreign investment is not suitable. Lack
of foreign investment means less employment opportunities and low per
capita income.
Techniques of productions used by developing countries are backward.
Due to out-dated methods of production, productivity level is low. Low
level of productivity means narrowness of market and reduction in exports
and increase in imports.
Imbalanced distribution of resources is an additional cause of low
per capita income. This situation leads to increase the gap between rich
and poor. Due to undesirable distribution of income and wealth, poor
population is unable to take part in economic activities to remove poverty.
Rapidly rising population is also a cause of poverty. Existing
population is already not provided basic necessities of life. Therefore,
increase in population will lead to decrease the per capita income.
Low per capita income is also due to dishonesty and corruption in
management. Officers receive a huge amount of illegal money for the
legal and illegal job. These unnecessary payments reduce the savings of
poor and result is low per capita income.
Lack of education and training is also a cause of low per capita
income. It reduces the abilities to work. Sometimes a worker due to
illiteracy remains unemployed or underemployed. Similarly, lack of skill in
entrepreneur also reduces his profit and its result is low per capita
income.

Non-availability or availability of backward infrastructure is also an

additional reason of low per capita income and poverty. Low level of
education, backward state of technology, poor health, inefficiency of labor
and poor system of transportation & communication are cause low per
capita income and poverty. Backward infrastructure causes low attraction
for foreign investment.
Pressure of foreign counties in our economic activities, backward
standard of productivities and improper basic facilities to population
reduces the living standard of population. Low living standard is a symbol
of low per capita income.

Life expectancy at birth

Life expectancy at age x is the mean number of years that would be lived by
a group of individuals of age x exposed until death to specific mortality
conditions. The most commonly used life expectancy is life expectancy at
age zero, that is, at birth (LEB).
The oldest confirmed recorded age for any human is 122 years. This is
referred to as the "maximum life span", which is the upper boundary of life,
the maximum number of years any human is known to have lived.
Economic circumstances also affect life expectancy. For example, in the
United Kingdom, life expectancy in the wealthiest areas is several years
longer than in the poorest areas. This may reflect factors such as diet and
lifestyle, as well as access to medical care. It may also reflect a selective
effect: people with chronic life-threatening illnesses are less likely to
become wealthy or to reside in affluent areas.
Calculation of Life expectancy
The most common methods used for calculating life expectancy are:

Fit a mathematical formula to the data.

For relatively small amounts of data, an established mortality table for
a larger population and make a simple adjustment to it to fit the data.
With a large amount of data, one looks at the mortality rates actually
experienced at each age.

Life expectancy is one of the factors in measuring the Human

Development Index (HDI) of each nation, along with adult literacy,
education, and standard of living.
Life expectancy is also used in describing the physical quality of life of an
area or, for an individual, when determining the value of a life settlement, a
life insurance policy sold for a cash asset.
Disparities in life expectancy are often cited as demonstrating the need
for better medical care or increased social support. A strongly associated
indirect measure is income inequality.

Infant mortality rate

Definition
Infant mortality is the death of a child less than one year of age.
Childhood mortality is the death of a child before the child's fifth birthday.
National statistics tend to group these two mortality rates together. Globally,
ten million infants and children die each year before their fifth birthday; 99%
of these deaths occur in developing nations. Infant mortality takes away
society's potential physical, social, and human capital.
Infant mortality rate (IMR) is the number of deaths of children less
than one year of age per 1000 live births. The rate for a given region is the
number of children dying under one year of age, divided by the number of
live births during the year, multiplied by 1,000.
The infant mortality rate correlates very strongly with, and is among
the best predictors of, state failure. IMR is therefore also a useful indicator of
a country's level of health or development, and is a component of
the physical quality of life index.
Calculation of IMR
The method of calculating IMR often varies widely between countries.
Measurements provide a statistical way of measuring the standard of living
of residents living in each nation. Increases and decreases of the infant
mortality rate reflect social and technical capacities of a nations' population.
UNICEF uses a statistical methodology to account for reporting differences
among countries. The World Health Organization (WHO) defines a live birth
as any born human being who demonstrates independent signs of life,
including breathing, heartbeat, umbilical cord pulsation or definite
movement of voluntary muscles.
Causes of higher infant mortality rate
Leading
causes
of
congenital
infant
mortality
are
malformations, sudden infant death syndrome, maternal complications
during pregnancy, and accidents and unintentional injuries. Environmental
and social barriers prevent access to basic medical resources and thus
contribute to an increasing infant mortality rate; 99% of infant deaths occur
in developing countries. Greatest percentage reduction of infant mortality

occurs in countries that already have low rates of infant mortality. Common
causes are preventable with low-cost measures. In the United States, a
primary determinant of infant mortality risk is infant birth weight with lower
birth weights increasing the risk of infant mortality. The determinants of low
birth weight include socio-economic, psychological, behavioral and
environmental factors.

Ranking of countries according to Infant mortality rate (IMR)

Data source: wikipedia.org

Adult Literacy rate

Definition
Literacy is
traditionally
understood
as
the
ability
to read and write. The term's meaning has been expanded to include
the ability to use language, numbers, images and other means to
understand and use the dominant symbol systems of a culture.
Literacy represents the lifelong, intellectual process of gaining
meaning from a critical interpretation of written or printed text. The
key to all literacy is reading development, a progression of skills that
begins with the ability to understand spoken words and decode
written words.
Many policy analysts consider literacy rates as a crucial measure of
the value of a region's human capital. For example, literate people
can be more easily trained than illiterate people - and generally have
a higher socioeconomic status. Thus they enjoy better health and
employment prospects. Literacy increases job opportunities and
access to higher education.
Calculation of Literacy rate
Literacy rate is calculated by number of Literate persons
divided by total population and multiply by 100. Suppose we want to
calculate the Literacy Rate of Population Aged 7 and above, the
number of literates is 8, 47,592 and its population aged 7 and above
is 9, 25,478.
8, 47,592 divided by 9, 25,478 = 0.91584241
multiply 0.91584241 by 100 = 91.58
Therefore, Literacy Rate for Population Aged 7 and above is 91.58.
GDP can indeed affect the literacy rate. If the country has a high
GDP then it can provide free education to poor which will improve the
literacy rate.
Reasons behind lower literacy rate of countries
The literacy rate cannot increase mainly because of the illiterate woman
population in the LDCs which comprises more than half of the population.

The GDP for education is less than it should be. Even this is not used
honestly.
The lack of resources cannot be blamed, because the Japanese get over
this problem in not more than 20 to 25 years of their independence.
Similarly, Cuba, Somalia and Vietnam did face these hurdles as they were in
crisis at their initial years too. The only difference is that they gave policies
and implemented them while other LDCs only laid emphasis on giving
policy documents rather than implement them. The only gap between the
policies and literacy is the lack of implementation.
The other main issues include lack of proper monitoring and checks and
balances, especially in public-sector education. Only proper monitoring and
a sound, corruption-free system can eradicate the gap between the nation
and development. Apart from it, adult literacy is badly needed and these
governments should take action to this end.
Also, the GDP must be raised to at least five per cent. The education
minister must be a person from the education sector who has the deepest
knowledge of the field and enough experience in solving educational
problems, not a politician.

Ranking of countries according to Adult literacy rate

Data source: Wikipedia.org

Human Development Index

Definition
The Human Development Index (HDI) is a statistical tool used to
measure a country's overall achievement in its social and economic
dimensions.
The Human Development Index (HDI) is a composite statistic of life
expectancy, education, and income indices used to rank countries into four
tiers of human development. It was created by Indian economist Amartya
Sen and Pakistani economist Mahbub-ul-Haq in 1990.
The HDI was created to emphasize that people and their capabilities
should be the ultimate criteria for assessing the development of a country,
not economic growth alone. The HDI can also be used to question national
policy choices, asking how two countries with the same level of GNI per
capita can end up with different human development outcomes. These
contrasts can stimulate debate about government policy priorities.
Calculation of HDI
The HDI was calculated using the following indicators:
Health - Life expectancy at birth
Education - expected years schooling for school-age children and
average years of schooling in the adult population
Income - measured by Gross National Income (GNI) per capita (PPP
US$)
The indicators of the three dimensions are calibrated and combined to
generate an HDI score between zero and one. Countries are grouped into
four human development categories or quartiles: very high, high, medium
and low. A country is in the very high group if its HDI is in the top quartile, in
the high group if its HDI is in percentiles 5175, in the medium group if its
HDI is in percentiles 2650 and in the low group if its HDI is in the bottom
quartile.
Western countries have higher HDI because they have improved
education as well as health sector. They have made more investment in
these areas. All factors discussed in section of GDP and per capita are also
related with HDI.

Most developing countries have made great progress over the past
several decades judging by improvements to their HDIs. The average HDI
increased by 41 percent overall and 60 percent for the lower quartile of
developing countries since 1970. The rapid development of the BRIC
countries from 1980 to 2011 is reflected in HDI increases of 70 percent
for China, 59 percent for India and 30.8 percent for Brazil. In China alone,
663 million people were lifted out of extreme poverty (i.e., life on less than
$1.25 per day) between 1981 and 2008 according to the World Bank.
The HDR classifies countries into four levels of development based on
their HDIs: very high human development, high human development,
medium human development and low human development. Each level
of development is generally accompanied by higher income, longer life
expectancy and more years of education, which combine to provide people
with more capabilities, freedoms and choices.

Ranking of countries according to Human Development Index

Data source: wikipedia.org

Population
Definition
The entire pool from which a statistical sample is drawn is called
population. The information obtained from the sample allows statisticians to
develop hypothesis about the larger population. Researchers gather
information from a sample because of the difficulty of studying the entire
population. As of today's date, the world population is estimated by
the United States Census Bureau to be 7.217 billion.
Population
growth increased
significantly
as
the Industrial
Revolution gathered pace from 1700 onwards. The last 50 years have seen a
yet more rapid increase in the rate of population growth due to medical
advances and substantial increases in agricultural productivity, particularly
beginning in the 1960s, made by the Green Revolution. In 2007 the United
Nations Population Division projected that the world's population will likely
surpass 10 billion in 2055.
Rapid population growth rates can make it difficult for countries to
raise standards of living and protect the environment because the more
people there are, the greater the need for food, health care, education,
houses, land, jobs, and energy. Adding more people to a countrys
population means that the wealth must be distributed among more people,
causing GNP per capita to decrease at least in the short term.
Measurement of Population density
Population density may be assessed in various ways and using various
techniques:

Crude Density or Arithmetic Density is the most common method. It is

a straight measurement of the total number of people per unit of land.

Nutritional /Physiological Density is the number of persons per unit of

area of cultivated land.

Agricultural Density is a density of agricultural population over

cultivated area. It is a useful index of man-land relationship in
primarily an agrarian context.

Economic Density The ratio between the requirements of population

and the resources made available to it by population in the areas it
occupies.

Room density is most commonly used in urban studies. It is the

average number of people per room in a given area.

Effects of huge population

At the global level, rising consumption requires an increase in
production and services so human wellbeing is inseparable from economic
growth and will have an environmental impact. To meet the needs of a
bigger and growing population, for instance the distribution of goods and
services, especially in developing countries means that we urgently need to
shift to a sustainable economy. At the local level, there is a need to tackle
environmental-human relations and give poor people in remote areas a
voice in the sustainable development debate.
Rapidly rising population is also a cause of poverty. Existing
population is already not provided basic necessities of life. Therefore,
increase in population will lead to decrease the per capita income.

Unemployment
Definition
Unemployment occurs when a person who is actively searching for
employment is unable to find work. Unemployment is often used as a
measure of the health of the economy. The most frequently cited measure of
unemployment is the unemployment rate. This is the number of
unemployed persons divided by the number of people in the labor force.
During periods of recession, an economy usually experiences a relatively
high unemployment rate. According to International Labor Organization
report, more than 197 million people globally or 6% of the world's workforce
were without a job in 2012.
Measurement of unemployment
The ILO describes 4 different methods to calculate the unemployment
rate.

Labor Force Sample Surveys are the most preferred method of

unemployment rate calculation since they give the most comprehensive
results and enables calculation of unemployment by different group
categories such as race and gender. This method is the most
internationally comparable.

Official Estimates are determined by a combination of information

from one or more of the other three methods. The use of this method has
been declining in favor of Labor Surveys.

Social Insurance Statistics such as unemployment benefits, are

computed base on the number of persons insured representing the total
labor force and the number of persons who are insured that are
collecting benefits. This method has been heavily criticized due to the
expiration of benefits before the person finds work.

Employment Office Statistics are the least effective being that they
only include a monthly tally of unemployed persons who enter
employment offices. This method also includes unemployed who are not
unemployed per the ILO definition.

Impacts of unemployment

High
and
persistent
unemployment,
in
which economic
inequality increases, has a negative effect on subsequent long-run economic
growth. Unemployment can harm growth not only because it is a waste of
resources, but also because it generates redistributive pressures and
subsequent distortions, drives people to poverty, constrains liquidity limiting
labor mobility, and erodes self-esteem promoting social dislocation, unrest
and conflict. 2013 Economics Nobel prize winner Robert J. Sheller said that
rising inequality in the United States and elsewhere is the most important
problem.
Unemployment increases susceptibility to malnutrition, illness, mental
stress, and loss of self-esteem, leading to depression. According to a study
published in Social Indicator Research, even those who tend to be optimistic
find it difficult to look on the bright side of things when unemployed. Using
interviews and data from German participants aged 16 to 94 including
individuals coping with the stresses of real life and not just a volunteering
student population the researchers determined that even optimists
struggled with being unemployed
Unemployment can cause underemployment, and fear of job loss can
spur psychological anxiety. As well as anxiety, it can cause depression, lack
of confidence, and huge amounts of stress. They will begin to lose social
contacts, and good social skills.
An economy with high unemployment is not using all of the resources,
specifically labor, available to it. There is a trade-off between economic
efficiency and unemployment.

Ranking of countries according to Unemployment rate

Data Source: The World Bank Data

Inflation
Definition
Inflation is the rate at which the general level of prices for goods and
services is rising, and, subsequently, purchasing power is falling. Central
banks attempt to stop severe inflation, along with severe deflation, in an
attempt to keep the excessive growth of prices to a minimum. Inflation rate
is
the percentage
increase in
the price of goods and services,
usually annually.
Inflation affects an economy in various ways, both positive and
negative. Negative effects of inflation include an increase in the opportunity
cost of holding money, uncertainty over future inflation which may
discourage investment and savings, and if inflation were rapid enough,
shortages of goods as consumers begin hoarding out of concern that prices
will increase in the future. Positive effects include ensuring that central
banks
can
adjust real
interest
rates (to
mitigate recessions), and
encouraging investment in non-monetary capital projects.
Measurement of Inflation
Widely used price indices for calculating price inflation include the following:

Commodity price indices, which measure the price of a selection of

commodities. In the present commodity price indices are weighted by
the relative importance of the components to the "all in" cost of an
employee.

Producer price indices (PPIs) which measures average changes in

prices received by domestic producers for their output. This differs from
the CPI in that price subsidization, profits, and taxes may cause the
amount received by the producer to differ from what the consumer paid.
There is also typically a delay between an increase in the PPI and any
eventual increase in the CPI. An earlier version of the PPI was called
the Wholesale Price Index.

GDP deflator is a measure of the price of all the goods and services
included in gross domestic product (GDP). The US Commerce
Department publishes a deflator series for US GDP, defined as its
nominal GDP measure divided by its real GDP measure.

DGP deflator = nominal GDP / real GDP

Effects of Inflation

An increase in the general level of prices implies a decrease in the

purchasing power of the currency. That is, when the general level of prices
rises, each monetary unit buys fewer goods and services. The effect of
inflation is not distributed evenly in the economy, and as a consequence
there are hidden costs to some and benefits to others from this decrease in
the purchasing power of money. For example, with inflation, those segments
in society which own physical assets, such as property, stock etc., benefit
from the price/value of their holdings going up, when those who seek to
acquire them will need to pay more for them. Their ability to do so will
depend on the degree to which their income is fixed. For example, increases
in payments to workers and pensioners often lag behind inflation, and for
some people income is fixed. Also, individuals or institutions with cash
assets will experience a decline in the purchasing power of the cash.
Increases in the price level (inflation) erode the real value of money (the
functional currency) and other items with an underlying monetary nature.
High or unpredictable inflation rates are regarded as harmful to an
overall economy. They add inefficiencies in the market, and make it difficult
for companies to budget or plan long-term. Inflation can act as a drag on
productivity as companies are forced to shift resources away from products
and services in order to focus on profit and losses from currency inflation.
[14]
Uncertainty about the future purchasing power of money discourages
investment and saving.[39] Inflation can also impose hidden tax increases; for
instance inflated earnings push taxpayers into higher income tax rates
unless the tax brackets are indexed to inflation.
With high inflation, purchasing power is redistributed from those on
fixed nominal incomes, such as some pensioners whose pensions are not
indexed to the price level, towards those with variable incomes whose
earnings may better keep pace with the inflation. [14] This redistribution of
purchasing power will also occur between international trading partners.
Where fixed exchange rates are imposed, higher inflation in one economy
than another will cause the first economy's exports to become more
expensive and affect the balance of trade. There can also be negative
impacts to trade from an increased instability in currency exchange prices
caused by unpredictable inflation.

Ranking of countries according to Inflation

Data Source: The World Bank Data

Major obstacles in the way of development

There are many barriers and difficulties in the way of economic
development of less developed countries. Development for developing
nations is desirable but not achievable due to a lot of hurdles. These
obstacles are grouped into the following five categories:
Economic Obstacles
Social Obstacles
Cultural Obstacles
Political Obstacles and
Administrative Obstacles
Economic Obstacles
Deficiency of capital and foreign exchange
Vicious circle of poverty
Backward natural resources
Backward state technology
Inflation
Low Per Capita Income
Internal and external debts
Dualistic economy
Deficit balance of payment
Social Obstacles

Illiteracy
Low living standard
Caste system
Unproductive expenditures
Consumption oriented society
Rapidly rising population

Cultural Obstacles

Custom and traditions

Wastage of resources in Litigation
Low participation of women
Out flow of the best brain
Inefficient entrepreneur

Political Obstacles

Political instability
Insincere leaders
Changes in fiscal policy

Administrative Obstacles

Corruption
Favoritism and Nepotism
Lengthy legal process
Law and order
Mis-use of authorities

Concluding remarks
Economic development in developing countries is facing a lot of problems.
It is very difficult to remove all these obstacles but not impossible. Governments
of developing and LDCs should adopt self-reliance policy and adopt modern
technology to remove these complications. Developed countries have

overcome these obstacles so their economies are growing.