Question 14 from UPSC CSE 2018 - Economy

Question

Increase in absolute and per capita real GNP do not connote a higher level of economic development, if

Accepted Answer

Correct Option: C. poverty and unemployment increase

Strategy: - Prioritize tangible improvements in living standards for the broader population over simple income figures like GDP or GNP growth.
- Recognize that rising GNP or per capita GNP is insufficient if poverty and unemployment are simultaneously increasing.
- Define true economic development by holistic welfare, rather than solely by output metrics.

Key Info: Gross National Product (GNP) measures the total income earned by a country's residents and businesses, including income from abroad. Per capita real GNP accounts for the population size and inflation, often used as an indicator of average income or standard of living.

However, economic development is broader than economic growth; it encompasses qualitative improvements in living standards, reduction in poverty, and employment opportunities. High GNP or per capita GNP does not guarantee equitable distribution, reduced poverty, or lower unemployment.

Development economists like Amartya Sen emphasize indicators such as life expectancy, literacy, health, employment, poverty levels, and access to basic amenities to assess real development. For example, international indices like the Human Development Index (HDI) include health and education, not just income. Therefore, even with rising GNP, if large sections remain unemployed or in poverty, the country may not be considered truly developed. This underlines the limitations of relying solely on GDP or GNP statistics to assess holistic economic development.

Answer

Option A: industrial output fails to keep pace with agricultural output

Answer

Option B: agricultural output fails to keep pace with industrial output

Answer

Option D: imports grow faster than exports