Why do you think average income is an important criterion for development ? Explain.

Explanation

Economic growth in terms of increase in the level of output becomes illusionary, if population of a country tends to grow at a pace close to the growth rate of output. If growth rate of population continues to offset the growth rate of output, per capita availability of goods and services may not increase over time. In other words, even when national income tends to increase over time, per capita income may not increase in a situation when population tends to constantly grow over time. But if per capita income increases, then national income also increases, whatever be the population level. Thus, average income is an important criterion for development