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Measuring development: the HDI and other indicators

Edexcel IAL Economics · WEC14 Developments in the Global Economy

Economic growth is an increase in real GDP; economic development is a broader improvement in living standards and well-being. The Human Development Index (HDI) is the best-known attempt to measure development.

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The HDI: three dimensions, four indicators

The UNDP's HDI combines:

Health: life expectancy at birth (goalposts 20 and 85 years).
Education: expected years of schooling for children (0 to 18 years) and mean years of schooling of adults aged 25 and over (0 to 15 years). The education index is the average of the two.
Income: gross national income (GNI) per head at PPP, in 2021 PPP dollars (goalposts $100 and $75,000), using natural logs because each extra dollar matters less at high incomes.

Each dimension index = (actual - minimum) / (maximum - minimum). The HDI is the geometric mean of the three indices: (health x education x income)^1/3.

Categories: very high 0.800 and above; high 0.700 to 0.799; medium 0.550 to 0.699; low below 0.550 (UNDP technical notes, 2025).

Country (2023)	HDI	Life expectancy	Expected years of schooling	Mean years of schooling	GNI per head (2021 PPP $)
Iceland	0.972	82.7	18.9	13.9	69,117
United Kingdom	0.946	81.3	17.8	13.5	54,372
China	0.797	78.0	15.5	8.0	22,029
India	0.685	72.0	13.0	6.9	9,047
Nigeria	0.560	54.5	10.5	7.6	5,569
South Sudan	0.388	57.6	5.6	5.7	688

Source: UNDP Human Development Report 2025, HDI table (data for 2023)

Advantages and limitations of the HDI

Advantages: broader than GDP per head, covering health and education; uses PPP so it allows for different price levels; simple to compare across countries and over time; shows countries with similar incomes but very different health or education (compare Sri Lanka's HDI of 0.776 with GNI per head of $12,616 against China's 0.797 with $22,029, both 2023).

Limitations: ignores inequality within a country (an average); ignores political freedom, environmental damage, working hours and happiness; data quality varies; years of schooling ignore quality of education; GNI ignores the informal economy and non-market output; the goalposts and equal weights are arbitrary.

Other measures in the specification

Percentage of adult male labour in agriculture (falls as countries develop).
Access to clean water.
Energy consumption per head.
Internet access per thousand people.
Mobile phone access per thousand people.
Doctors per thousand people.

Using several indicators together gives a fuller picture than any single number.

Worked example

Use India's 2023 data (life expectancy 72.0, expected schooling 13.0, mean schooling 6.9, GNI per head $9,047) to calculate its HDI.

Health = (72.0 - 20) / 65 = 0.800
Education = (13.0/18 + 6.9/15) / 2 = 0.591
Income = (ln 9,047 - ln 100) / (ln 75,000 - ln 100) = 0.681
HDI = (0.800 x 0.591 x 0.681)^1/3 = 0.685

Answer: 0.685, matching the UNDP value of 0.685 (medium human development)

Key idea: HDI: life expectancy, expected and mean years of schooling, GNI per head (PPP, logged); geometric mean of three indices. Broader than GDP, but ignores inequality, freedom, environment and quality. Other indicators: agriculture share, clean water, energy use, internet, mobiles, doctors.

Check yourself

Life expectancy is 72.0 years. Calculate the health index using goalposts of 20 and 85, to 3 decimal places.
Show answer
0.800. (72 - 20) / (85 - 20) = 0.800.
Expected years of schooling are 12.6 and mean years of schooling are 7.5. Calculate the education index to 3 decimal places.
Show answer
0.600. (12.6/18 + 7.5/15) / 2 = (0.700 + 0.500) / 2 = 0.600.
GNI per head is $5,569 (2021 PPP). Calculate the income index to 3 decimal places.
Show answer
0.607. (ln 5,569 - ln 100) / (ln 75,000 - ln 100) = 0.607.
A country's three dimension indices are 0.80, 0.60 and 0.70. Calculate its HDI to 3 decimal places.
Show answer
0.695. (0.80 x 0.60 x 0.70)^1/3 = 0.695.
Using UNDP categories, Nigeria's 2023 HDI of 0.560 places it in which group?
- Medium human development
- Low human development
- High human development
- Very high human development
Show answer
Medium human development. Medium is 0.550 to 0.699.
Which is a limitation of the HDI?
- It includes life expectancy
- It uses purchasing power parity
- It ignores how income and opportunities are distributed within a country
- It combines several indicators
Show answer
It ignores how income and opportunities are distributed within a country. The HDI is an average, so inequality is hidden.
Explain why the percentage of the labour force in agriculture can indicate a country's level of development.
Show answer
As countries develop, productivity in farming rises and workers move into manufacturing and services, so a high share in agriculture usually indicates low productivity and a less developed economy.. Structural change accompanies development.

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Last updated 8 November 2026. Spotted a mistake? Tell us.