Difficulties Faced in the Measurement of Economic Development

The measurement of economic development is really a difficult work as every method faces the problems of its own kind.

However some of these problems are discussed as below:

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 under-developed economies the data on national income, per capita income and per capita consumption are not available. Due to lack of statistical data, it is difficult to assess economic development accurately in such countries.

2. Controversy over national Income and per capita Income:

The economists also differ over the issue weather 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 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 same economic level. But per capita income would indicate country B as more important than country A. Therefore, we are required to know both these measures to assess economic development accurately.

3. Lack of Accurate measure of Economic Development:

An other controversy arises over the accurate measure of economic development. Some regard national income and other 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 of 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 type 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 measurements of economic development do 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.