ABSTRACT
Many economic concepts are widely used but rarely defined with some degree of precision. Economic development is one of these concepts. Its meaning is best apprehended by comparison with economic growth and by thinking about its measurement. The present chapter is devoted to defining these concepts and to discussing their measurement. The attempt to define development and growth in sections 1.1 and 1.2 is followed by a discussion of the income distribution and poverty in section 1.3, and an examination of the problems arising in international comparisons of income levels in 1.4. The chapter concludes with a short discussion of composite development indicators, notably the Human Development Index, which is examined in more detail in the first of our case studies. The other two case studies of this chapter deal with the purchasing power parity (PPP) approach to international income comparisons, as well as with an approach to overcome certain problems in deflating the national accounts.
