Economics A2 · International economic issues. The idea in plain words, the rules to remember, the mistake to avoid and a worked example, written and checked by Mega Lecture.
Economic growth is a rise in real output. Economic development is wider: better living standards, health, education and choice. Countries are classified by national income (the World Bank uses GNI per head to sort them into low, lower-middle, upper-middle and high income) and by level of development, for example by the Human Development Index.
Income comparisons need care. Use real figures to remove inflation, per head figures to allow for population, and purchasing power parity (PPP) to allow for different price levels. Even then, income says nothing about its distribution, unpaid work, leisure or the environment.
So economists also use non-monetary indicators and composite indicators such as the HDI, MEW and MPI.
Students compare living standards using total GDP or GNI. A large population can give a high total with a low income per head, so always divide by population.
Answer: GNI per head is $12,400.
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