Are Mauritius And Ethiopia As An Indicator For Economic Development? Essay

Are Mauritius And Ethiopia As An Indicator For Economic Development? Essay

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Gross Domestic Product(GDP) is an aggregation of productivity within the geographic boundaries of a country (Chang, 2014). GDP growth set out to measure increases in productivity hence evaluating the contraction or expansion of economies. It was a great invention aiding in quantifying the economy and an instrument of comparison of countries. GDP in the past and recent times has blindly been expanded as a proxy for economic development which it never in its creation meant to measure. This paper uses Mauritius and Ethiopia as case studies to highlight pitfalls of GDP as an indicator for economic development exploring issues of welfare, inequality, environmental sustainability and informal sector neglect.
Economic development is growth based on increasing productive capabilities of a country (Chang, 2014) resulting in equality, poverty reduction and higher living standards; in summary growth with depths (ACET, 2014). From the 2000’s, many African countries have experienced record-breaking rates of GDP growth which is seemingly encouraging. Countries like Ethiopia and Chad are spearheading this growth with Chad reaching a record high of 33.649% in 2000; categorizing these African economies in the miracle zone as prescribed by (Chang, 2014). Mauritius on the other hand has experienced sustained growth at a lower rate of 3.5% which is encouraging yet has not received much media attention as it’s contemporaries stated above.
First, GDP is a quantitative aggregation of prices of goods and services hence an unsuitable proxy for well-being. It does not reveal the satisfaction of an individual’s basic needs and the quality of it. Neither does it measure the non-economic aspects of well-being such as health and education but rather provides...

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...nd, a comparison of the countries on the BTI transformation index measuring economic transformation reveals Mauritius at the top of the ladder even beating Asian tigers like China and Taiwan. Ethiopia is seen ranking 160th on that same scale. The GDP growth story is incomplete until it can show the prevailing inequality, effects on environment, asset ownership and finally qualitative measures of productivity. Despite its shortcomings, GDP is an inherently good measure if its application is limited to what it was created for. An expansion of GDP growth to capture economic development makes the indicator inherently faulty. For measures of economic development indexes such as BTI transformation index could be used. This confirms (Chang, 2014) claim that a single indicator is incapable of measuring economic development; a use of indexes is a step in the right direction.

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