Concept of Economic Development and Its Measurement

During 1950 and 1960s many developing countries realized their economic growth targets but standard of living of the people did not change. In fact existence of mass poverty, illiteracy and ill health continued to plague the developing countries. This implied that there was something wrong with this definition of economic development. Most of the economists clamored for dethronement of GNP and define development in terms of removal of poverty, illiteracy, disease and changes in the composition of input and output, increase in per capita output of material goods. Increase in output of goods and services and in income does not imply an improvement in the standard of living of the people because GDP is a narrow indicator of economic development that does not include non-economic indicators such as leisure time, access to health, education, environment, freedom or social justice.