If two countries earn the same, but the people in one live longer and learn more — are those two countries really at the same level of “development”?
Let me tell you about two countries that, on the one chart every economist reaches for first — income per person — look like near-twins. If that chart were all you had, you’d file them together and move on. This case is about everything that chart doesn’t show, and why an economist who stopped there would have missed the whole point.
Let me tell you about a country that struck oil. Almost overnight, its income per person leapt to something that looked distinctly European — on paper, a wealthy nation. That country is Equatorial Guinea. And on the same chart, at almost the same income, sits Hungary: a middle-income European country, no oil windfall, nothing dramatic about its numbers at all.
By income, they are twins. Look at that number and you would say these two places are living roughly the same life. But then you look at the life itself. In Hungary, a person could expect to live to about 77, and more than nine in ten children were in school. In Equatorial Guinea — with the same national income — life expectancy sat around 64, and fewer than half of children were in school. The oil had lifted the number. It had not lifted the life.
| Equatorial Guinea | Hungary | |
|---|---|---|
| Income per person GNI, 2009 | ~$10,830 | ~$13,410 |
| Life expectancy | ~64 years | ~77 years |
| Children in school net enrolment | ~44% | ~91% |
A rise in income is growth — a number. A longer, healthier, better-schooled, freer life is development — and the two can come apart completely. Equatorial Guinea grew. It did not, in the way that matters, develop.
An average is a generous friend to a country like this. Oil revenue is enormous and it lands in a few hands; divide it across everyone and the average income looks marvellous, even if almost no one actually lives that way. The number can rise without the clinic being built, without the school opening, without the ordinary person’s week changing at all.
That is the quiet lesson under the whole chapter. Development is not the same as earning more. It is people living longer, learning more, moving out of subsistence, choosing lives they have reason to value. Income can buy those things — but only if it is turned into them. When it isn’t, you get exactly this: the money rose, and the lives didn’t.
A country’s average income jumps to European levels after an oil find. A minister declares the country “developed.” Is the minister right? Answer carefully.
Define “growth” and “development” by pointing at this story — not by reciting a textbook line.
Turn it around: name a way a country could raise development without its income rising very much. Would that count as progress?