Formation of the EU Development Index

In the context of the global financial-economic crisis it becomes important to find a stronger base for assessment of the socio-economic development and, in particular, search for better indicators. Therefore, the hypothesis is set that it is necessary to develop the EU Development Index, which will provide better assessment of an on-going socio-economic change. The objective of the article is to describe the EU Development Index calculation results and compare them with the Human Development Index values for each Member state of the EU. Ranking list of the EU Member States according to the Human Development Index values did not change substantially, suggesting that the Human Development Index inadequately responds to key socioenvironmental changes that occurred during the global financial economic crisis. At the same time, a number of countries show a sharp decline of the EU development index values, reflecting the impact of global economic crisis, while some countries with a high level of public debt and low confidence of the financial markets have remained in their positions by the both indexes in the year 2009. However, these countries most probably will be forced to make the considerable fiscal discipline measures, which inevitably will have an impact on GDP and income indicators in these countries, therefore their rankings in the coming years will deteriorate. Completely impartial assessment will be possible when countries with high debt levels will have balanced their budgets and economic growth will be based mostly on their own income and production instead of external cash flows and investment entering the country. It can be concluded that EU Development Index allows, in a more equitable fashion, to assess disparities of the EU Member States by development level and more rapidly reflect the rapid socio-economic change.