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Indicators of Economic Development

Economic development varies among countries. It can also vary among places within the same country. A region's level of economic development helps predict quality of life and population growth rate. Geographers use demographics to show economic development. These include Gross Domestic Product (GDP) per capita, educational achievement, and labor force.

The urban-rural ratio is the percentage of a population that lives in cities and metropolitan areas, versus the percentage that lives in the countryside and small towns. Cities are more economically developed than rural areas. Thus, a higher rate of urbanization means a higher level of economic development.

GDP per capita is the average amount of income each person in a country produces. This number is determined by dividing a country’s entire GDP by the number of people who live there. A high GDP per capita is the result of a strong economy.

Educational achievement describes the highest level of education an individual has completed. For example, primary/elementary school, secondary/high school, bachelor’s degree, master’s degree, and doctorate degree. Low average educational achievement indicates lower levels of economic development.

Labor force characteristics are based on the number of people working in specific industries. They can be broken down into four sectors:

• The primary sector produces food and removes raw materials from the Earth. Industries include farming, mining, and logging.
• The secondary sector creates goods out of raw materials. Industries include construction, manufacturing, and engineering.
• The tertiary sector sells goods and services to businesses and the public. Industries include retail, healthcare, and media.
• The quaternary sector focuses on processing information and capital. Industries include education, finance, and scientific research.

Generally, less economically developed areas have a labor force dominated by the primary sector. More economically developed regions have a larger percentage of its labor force in the tertiary and quaternary sectors.