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Per Capita Income  

One of the three dimensions making up the Human Development Index (HDI) is the income level indicated by the country’s Gross Domestic Product (GDP) per capita at Purchasing Power Parity (PPP) in US$.

A country’s gross domestic product (GDP) per capita does not necessarily reflect the population’s general standard of living. It rather gives an impression of the economic potential and the value generated in a country in relation to its total population. For the purpose of international comparison, the indicator applied for the composite HDI adjusts for price differences across countries by applying an exchange rate called purchasing power parity (PPP). One US$ multiplied by the PPP rate has the same purchasing power in the domestic economy as one US$ has in the United States of America (UNDP 2009).

Purchasing power is an important indicator of standard of living.
Source: Kellner 2008
( click to enlarge )

Angola

According to latest HDI data, Angola’s GDP per capita in PPP was 5 385 US$ in 2007, which puts the country on rank 101 by international comparison. Angola’s low level of human development is at odds with its economic prosperity derived largely from oil and diamonds. Income and wealth distribution are much skewed, with most of the economic benefits accruing to a small economic and political elite while the vast majority of the population remains in poverty.

Due to high oil prices as well as increases in oil and diamond production and exports, the country has seen rapid economic growth since the end of the civil war in 2002. This led to the rapid increase of per capita incomes: While at the end of the civil war, Angola’s GDP per capita was only about 800 US$, it tripled to reach 2 400 US$ by 2004 (Collier 2004). In 2007 it even increased to nearly 5 400 US$ (UNDP 2007).

The ranking difference of 42 positions between the composite HDI (rank 143) and GDP per capita (rank 101) points to the fact that Angola’s economic prosperity has not yet adequately improved living conditions (measured in life expectancy and education) of the poor majority of the population.

The most commonly applied measure of inequality of income or wealth is the Gini coefficient, which can range from 0 to 1; it is sometimes multiplied by 100 to range between 0 and 100. A low Gini coefficient indicates a more equal distribution, with 0 corresponding to complete equality, while higher Gini coefficients indicate more unequal distribution, with 1 (or 100) corresponding to complete inequality (World Bank website 2010d).

In 2007, Angola’s Gini coefficient was 58.6, which is about the level of Brazil (55.0) or South Africa (57.8).

Namibia

In 2007, Namibia’s GDP per capita (in PPP terms) reached 5 155 US$, ranking the country 105 of 181 countries with data.

Since independence in 1990, Namibia has been largely peaceful and stable. A strong parliamentary democracy delivers sound macro-economic policies for a diversified but small market. The country is rich in diamonds, minerals, and other natural resources. Annual economic growth since independence has averaged 4.5 %, sufficient to increase per capita income in most years (World Bank website 2010e; AfDB website 2010).

The ranking difference of 23 positions between the composite HDI (rank 128) and GDP per capita (rank 105) reflects the country’s high income inequality and widespread poverty. Income disparities are among the highest worldwide (UNDP 2009).

Income disparities are among the highest worldwide, which is reflected by a 2007 Gini coefficient of 74.3 (UNDP 2009). 

For further assessments concerning human development and poverty in Angola and Namibia, please check the website of FANRPAN, a regional policy research and advocacy network promoting effective food, agriculture and natural resources policies in southern Africa.

 

 



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