Q.Explain the various indicators used to measure economic development.

Development is measured using both income-based and composite non-income indicators.

Because economic development is multi-dimensional, no single figure fully captures it; economists therefore use several complementary indicators.

1. Per Capita Income (PCI): the simplest and oldest indicator, calculated as $\text{PCI} = \dfrac{\text{National Income}}{\text{Population}}$. A rising PCI suggests greater average purchasing power, but as only an average it hides how income is distributed and ignores non-income welfare.

2. Human Development Index (HDI): introduced by the UNDP to overcome PCI's limitations, HDI combines three dimensions — a long and healthy life (life expectancy), knowledge (schooling), and a decent standard of living (GNI per capita) — each converted to a 0-to-1 dimension index and combined by geometric mean: $HDI = \sqrt[3]{I_{health}\times I_{education}\times I_{income}}$. Countries are then classified as low, medium, high, or very high human development.

3. Other indicators: the Physical Quality of Life Index (PQLI, based on infant mortality, life expectancy, and literacy), the Human Poverty Index, literacy and school-enrolment rates, infant and maternal mortality rates, and access to safe drinking water, sanitation, and electricity are all used as supplementary measures, each highlighting a dimension that a single income figure would miss.

Together, these indicators let planners and BIEAP Economics students assess not just how much an economy produces, but how well that production is translating into a better quality of life for its people.

Discussing only per capita income and omitting HDI, or describing HDI without explaining its three underlying dimensions.