Gross Domestic Product is a rough measure of economic power. Calculated basically as the sum of the value of an economy's goods and services, GDP is useful for its simplicity. However, it has some key disadvantages in its use as an economic growth indicator.
Pros:
- many countries use it - comparison
- easy to calculate
- consistently measured across all countries
Cons:
- does not include domestic household products, or black market
- does not consider the real value of money as it uses price
- does not consider how the wealth of a nation is distributed
- does not take into consideration the cost of productivity externalities
Human Development Index is a composite statistic used to rank countries by level of "human development" and distinguish "very high human development", "high human development","medium high development" and "low human development" countries. The HDI is a comparative measure of life expectancy, literacy, education and standards of living for countries worldwide. It is a standard means of measuring well-being, especially child welfare. It is used to distinguish whether a country is developed, a developing or an under-developed country, also to measure the impact of economic policies on quality of life. The HDI has been criticized on a number of grounds, including failure to ecological considerations, focusing exclusively on national performance and ranking not paying much attention to development from a global perspective and based on grounds of measurement error of the underlying statistics and formula changes by the UNDP which can lead to severe misclassification of countries in the categories of being a"low', "medium", "high" or "very high" human development country. The Index has also been criticized as "redundant" and a "reinvention of the wheel", measuring aspects of development that have already been exhaustively studied. The Index has further been criticized for having an inappropriate treatment of income, lacking year to year comparability, and assessing development differently in different groups of countries.
