How To Compare Development Indifferent Countries Or States?

For comparing countries, their income is considered to be one of the most important attributes. Countries with higher income are more developed than others with less income. To find the income of a country we have to find out the National Income of that country and its per capita income.

NATIONAL INCOME:

National Income is defined as the total value of all the goods and services produced within a country plus income coming from abroad.

PER CAPITA INCOME:

When the total national income is divided by the total population it gives us the Per Capita Income. In World Development Report 2006, brought out by the World Bank, this criterion is used in classifying countries. Countries with per capita income of Rs. 453000 per annum and above in 2004, are called rich countries and those with per capita income of Rs 37000 or less are called low – income countries. India comes in the category of low income countries because its per capita income in 2004 was just Rs 28000 per annum

"WHITE AVERAGES ARE USEFUL FOR COMPARISON, THEY ALSO HIDE DISPARITIES:

Let us consider two countries, A and B. For the sake of simplicity, we have assumed that they have only five citizens each.

COMPARISON OF TWO COUNTRIES

Will you be equally happy to live in both these countries? Are both equally developed? Perhaps some of us may like to live in country B if we are assured of being its fifth citizen but if it is a lottery that decides our citizenship number then perhaps most of us will prefer to live in country A. Even though both the countries have identical average income, country A is preferred because it has more equitable distribution. In this country people are neither very rich nor extremely poor. On the other hand most citizens in country B are poor and one person is extremely rich. Hence, while average income is useful for comparison it does not tell us how this income is distributed among people.