When it comes to measuring the success of development for us, the common people have various views. This is because apart from their different knowledge, their interests are different too. For this reason, every citizen needs to have the same perception of the indicators of development success, so that the success of the development can be understood from the same point of view .
To measure the extent to which development progress has been achieved, indicators are needed. Development indicators and variables can be different for each country. In countries that are still poor, measures of progress and development may still be around basic necessities such as electricity to a village, rural health services, and low prices of basic food. On the other hand, in countries that have been able to meet these needs, development indicators will shift to secondary and tertiary factors (Tikson, 2005).
International institutions use economic indicators, including per capita income (GNP or GDP), economic structure, urbanization, and the amount of savings. Besides that, there are also two other indicators that show the progress of a nation’s or a region’s socio-economic development, namely the Quality of Life Index (IKH or PQLI) and the Human Development Index (HDI). In the following, a summary of Deddy T. Tikson (2005) will be presented on these five indicators:
1. Income per capita
Per capita income, both in terms of GNP and GDP, is one of the macroeconomic indicators that has long been used to measure economic growth. From a macroeconomic perspective, this indicator is a measurable part of human well-being, so that it can describe the welfare and prosperity of society. It seems that per capita income has become an indispensable macroeconomic indicator, although it has several drawbacks. So that the growth of national income, so far, has been used as a development goal in third world countries. It is as if there is an assumption that the welfare and prosperity of society is automatically indicated by an increase in national income (economic growth). Even though, some experts consider the use of this indicator to ignore the distribution pattern of national income. This indicator does not measure the distribution of income and equal distribution of welfare, including equal access to economic resources.
2. Economic structure
It has been assumed that an increase in per capita income will reflect a structural transformation in the economy and social classes. With economic development and per capita increase, the contribution of the manufacturing / industrial and service sectors to national income will continue to increase. The development of the industrial sector and the improvement in the level of wages will increase the demand for industrial goods, which will be followed by development of investment and expansion of the workforce. On the other hand, the contribution of the agricultural sector to national income will continue to decline.
Urbanization can be interpreted as the increasing proportion of the population living in urban areas compared to rural areas. Urbanization is said to not occur if population growth in urban areas is equal to zero. In accordance with the industrialization experience in Western European countries and North America, the proportion of the population in urban areas is directly proportional to the proportion of industrialization. This means that the speed of urbanization will increase in line with the fast pace of the industrialization process. In industrialized countries, the majority of the population lives in urban areas, while in developing countries the largest proportion lives in rural areas. Based on this phenomenon, urbanization is used as an indicator of development.
4. Savings Figures
The development of the manufacturing / industrial sector during the industrialization stage requires investment and capital. Financial capital is a major factor in the industrialization process in a society, as happened in England in general Europe at the beginning of the growth of capitalism which was followed by the industrial revolution. In a society with high productivity, this venture capital can be collected through savings, both private and government.
5. Quality of Life Index
The Quality of Life Index (IKH) or Physical Qualty of life Index (PQLI) is used to measure people’s welfare and prosperity. Macroeconomic indexes cannot provide a picture of people’s welfare in measuring economic success. For example, the national income of a nation can continue to grow, but without increasing social welfare.
The quality of life index is calculated based on:
(1) the average life expectancy at the age of one year,
(2) infant mortality rate, and
(3) numerical literacy.
In the quality of life index, the average life expectancy and infant mortality rate can simultaneously describe the nutritional status of children and mothers, health status, and family environment which is directly related to family welfare. Education is measured by literacy rate, which can describe the number of people who have access to education as a result of development. This variable describes the welfare of the community, because the high economic status of the family will affect the educational status of its members. By the makers, this index is considered as the best way to measure the quality of human beings as a result of development, in addition to per capita income as a measure of human quantity.
6. Human Development Index ( Human Development Index )
The United Nations Development Program (UNDP) has developed other development indicators, in addition to several existing indicators. The basic idea underlying this index is the importance of paying attention to the quality of human resources. According to UNDP, development should be aimed at developing human resources. In this understanding, development can be defined as a process that aims to develop options that can be made by humans. This is based on the assumption that improving the quality of human resources will be followed by the opening of various options and opportunities to determine the path of human life freely.
Economic growth is considered an important factor in human life, but it will not automatically affect the improvement of human dignity and dignity. In this connection, there are three components that are considered most decisive in development, long and healthy life, the acquisition and development of knowledge, and the improvement of access to a better life. This index is created by combining three components. The three components are:
(1). average life expectancy at birth,
(2). average educational attainment at the elementary, junior high and high school levels,
(3). per capita income calculated based on Purchasing Power Parity .
Human development is closely related to increasing human capabilities which can be summarized in increasing knowledge, attitude and skills , in addition to the health status of all family members and their environment.