Thursday, 16 April 2015

Development Indicators

The scope of human development being very broad, it
was a challenge to devise a suitable indicator. This is
because it would be desirable to include all the variables
that expand human choices and freedoms, and so the
variables would be so many. Again, human development
being a dynamic concept, evolving through time and
varying over space (choices of people would be culture
specific too) there will be entry of a number of criteria.
This would pose a problem of standardization as well
as preciseness. Too many variables would make the
picture complex and unmanageable.
So the new index needed to include only a limited
number of variables, yet capture the essence of human
development. It needed to be a composite index for all
variables and cover both social and economic choices.
This measure is called the Human Development Index
(HDI). Later in 1995 and 1997, two other measures —
gender development index (GDI) and Human Poverty
Index (HPI) were constructed to focus on specific
aspects.

Human Development Index (HDI)

The Human Development Index was evolved by focusing
on three basic elements of human life: longevity,
knowledge and decent living standards. For longevity,
life expectancy at birth is the indicator; for knowledge,
literacy figures are taken into account; and as a
measure of decent living, purchasing power-adjusted
real GNP per capita was chosen (HDR 1990).
So the first step is to construct a country’s measure of
deprivation for each of these basic variables. Minimum
and maximum values are defined for the actual observed
values of each of the three variables in all countries.
The deprivation measure then places the country in
the 0-1 range, where 0 is the minimum observed value
and 1 the maximum. So, if the minimum observed life
expectancy is 40 years and the maximum 80 years,
and a country’s life expectancy is 50 years, then its
index for life expectancy is 0.25. The second step is to
compile an average indicator by taking a simple average
of the three indicators. The third step is to measure
the HDI as 1 minus the average deprivation index
obtained. The HDI value shows how a country is placed
vis-à-vis other countries.
Because the relative nature of the maximum and
minimum values for each year created difficulty in
comparison of a country’s performance from year to
year (a country might improve its indicators and yet
see a fall in its HDI ranking due to relative better
performance by others), now a fixed-value system has
been adopted. The maximum and minimum values are
the ones observed over the previous three decades or
expected over the next three decades, which allow
comparison of country’s performance over a period of
60 years.

HDI versus GNP

 Besides income, the HDI measures education
and health and is thus multidimensional,
rather than one-dimensional.
 It draws attention of policy makers towards
the ultimate objectives of development not
just the means.

 It is more meaningful as a national average
than GNP because there are much greater
extremes in income distribution than in the
distribution of life expectancy and literacy.
 It shows that the human development gaps
between nations are more manageable than
the ever widening income disparities The
average income of the South may be only 6
per cent of the North’s— but its life expectancy
is 80 per cent, its nutrition level 85 per cent
and its adult literacy rate 66 per cent on the
North’s.
 The HDI can be disaggregated by gender,
ethnic group or geographical region and in
many other ways — to present relevant policy
inputs as well as to forecast impending trouble.
Indeed, one of the HDI’s strength is that it
can be disaggregated in ways that hold a
mirror up to society.
How is the HDI useful? Mahbub ul Haq enlists some
points how the HDI captures many conditions of human
life.
National Priorities: The comparison of HDI of various
countries shows which countries are able to combine
economic growth with social development and which
are falling behind. This helps policy makers set national
priorities and achieve them. Thus the HDI rankings
serve as a reality check.
Potential Growth: Economic growth also depends on
human capital formation, which in turn depends on
investments on health and education. So the HDI an
reveal the future potential of economic growth. If a
country has invested in human infrastructure, which
shows in its HDI, it can accelerate GNP too by choosing
proper economic policies.
Disparities: The disaggregation of HDI by gender, ethnic
groups, class and geographical regions helps bring out
disparities between various sections of society. It has
enormous policy impact in serving as an early warning
system to check it and prepare national development
plans to create parity among different sections through
special measures necessary.
Change over time: The annual HDI exercises keep
track of the changes in a country’s human development
and also the overall change in human development in
the world. For example, the majority of world population
(73%) was in the low human development category in
1960, but only 35% were in that category in 1992. An
interesting observation is that the developing countries
more than doubled their average HDI between 1960
and 1992 while the developed countries, which already
were on high levels, increased theirs by only 15%.

Human Poverty Index (HPI)

With the realization that poverty is a multi-dimensional
problem, the usual practice of defining it in terms of
income and consumption is gradually losing hold. In
fact, in the 1970s the idea of ‘social exclusion’ came
into prominence. Thus, those who were not incomepoor
yet were marginalized in society also drew
attention (HDR, 1997). The Human Development Report
of 1997 brings in a concept of Human Poverty Index
(HPI) in order to collectively present varied aspects of
deprivation in the quality of life so that we are able to
gauge the spread of poverty in a community.
The HPI has three essential elements which are already
a part of the HDI-longevity, knowledge and a decent
standard of living. The first deprivation relates to
survival — the vulnerability to death at a relatively
early age — and is represented in the HPI by the per
centage of people expected to die before age 40. The
second aspect relates to knowledge — being excluded
from the world of reading and communication — and is
measured by the per centage of adults who are
illiterate. The third dimension relates to a decent
standard of living, in particular, overall economic
provisioning. This is shown by a composite of three
variables— the per centage of people with access to
health services and to safe water, and the per centage
of malnourished children under five.
However, human poverty has many other aspects which
are difficult to measure. Some of these vital areas are
lack of political freedom, lack of personal security,
inability to participate in decision-making (Fukuda-
Parr and Shiva Kumar, 2004).

Gender-Related Development Index (GDI)

Gender deprivation and inequality has long been the
subject of discussion in development. One of the
critiques of HDI was that it did not take into account
the differential impact of development on men and
women. To address this issue, a new measure was
invented in 1995. The Human Development Report of
1995 states that “human development, if not
engendered, is endangered”.
For measuring GDI, inequalities between men and
women are taken note of and then the overall
achievement of men and women in three aspects of
HDI — life expectancy, educational attainment, and
adjusted real income are considered. On the basis of
analysis of GDI values, many meaningful observations
have been made such as gender equality is not
dependent on the income level of a society. Since
1995, these measures form an integral component of
the human development reports.
Gender Empowerment Measure (GEM)
The Gender Empowerment Measure (GEM) focuses on
participation — economic, political and professional. It
finds out the extent to which women have been
empowered or enfranchised to participate in various
aspects of public life as compared to men

Human Development Reports: ImportantIssues

Human development is not a static concept but a
dynamic one. Because its goal is to expand the
capabilities and freedoms of people which cannot be
limited, the human development concept is also ever
expanding to account for those. Besides, newer ways
to assess human development achievements are coming
up with time, for instance, the human poverty index
and gender development index. These ideas emerge
from deliberations among experts, people, and
practitioners of development across the world and are
incorporated in the Human Development Report (HDR)
published by the UNDP every year. The theme deals
with an issue which is in focus of development. The
HDRs are immensely useful in giving insights into the
state of human development — globally and nationally
— and serve as a reality check for governments and as
a guideline for action for development institutions and
non-government organisations. Given below is a
collection of the main themes of the reports from year
1990 till 2006. You will see many dimensions and
issues of human development reflected in these
Reports.