06 November 2010

'People first' stressed on 20th Anniversary edition of HDR

People are the real wealth reiterates the 20th anniversary edition of Human Development Report (HDR) 2010. It also comes up with three new measures for discussing poverty and inequality.

Cover Page, HDR 2010, © HDR 2010, UNDP.

The first HDR in 1990 by United Nations (UN) started a new era in development thinking. It put people at the centre and includes the processes of enhancing their choices as well as improvement in their well-being. Human beings are the ends. It is for this that human development is considered to be different from the following approaches.

* Economic growth is a means and not an end of development. Moreover, high GDP growth does not necessarily translate to progress in human development. Global experience has shown that income and human development are not always perfect companions, where some countries display relatively high levels of human development for their income and vice versa.

* Theories of human capital formation and human resource development view human beings as means to increased income and wealth rather than as ends. These theories are concerned with human beings as inputs to increasing production;

* The human welfare approach looks at human beings as beneficiaries rather than participants in the development process;

* The basic needs approach concentrates on the bundle of goods and services that deprived population groups need - food, shelter, clothing, health care and water. It focuses on the provision of these goods and services rather than their implications on human choices.

It can however encompass the above and it is with this broad thinking that the HDR beyond an income-based measure to the human development index (HDI) that had health, education and standard of living as its components. Over time, the index for each component as well as the measure has evolved. Nevertheless, one important criticism of the HDI has been the linear aggregation of three components. The current report takes care of this by proposing a geometric mean. Another alternative, which has not been used in the report, is to calculate the shortfall from the ideal and take its inverse.

There are also some further departures in the way HDI has been calculated. The components of education are mean years of schooling for adults of 25 years and above and expected years of schooling for children of school going age (earlier they were literacy rate for adults and gross enrollment ratio for school children). For decent standard of living the 2010 report uses per capita gross national income in purchasing power parity dollars (earlier it was gross domestic product). Further, the global/expected maximum and minimum are taken from observations or estimations from the last forty years (1970-2010). With regard to education component where minimum can be zero, one is added to all observations to avoid problems in the calculation of a geometric mean.

In addition, there are three more measures in the report

* The Inequality-adjusted Human Development Index (IHDI) adjusts the Human Development Index (HDI) for inequality in distribution of each dimension across the population. The IHDI accounts for inequalities in HDI dimensions by “discounting” each dimension’s average value according to its level of inequality. The IHDI equals the HDI when there is no inequality across people but is less than the HDI as inequality rises. In this sense, the IHDI is the actual level of human development (accounting for this inequality), while the HDI can be viewed as an index of “potential” human development (or the maximum level of HDI) that could be achieved if there was no inequality. The “loss” in potential human development due to inequality is given by the difference between the HDI and the IHDI and can be expressed as a percentage.

* The Gender Inequality Index (GII) reflects women’s disadvantage in three dimensions—reproductive health, empowerment and the labour market—for as many countries as data of reasonable quality allow. The index shows the loss in human development due to inequality between female and male achievements in these dimensions. It ranges from 0, which indicates that women and men fare equally, to 1, which indicates that women fare as poorly as possible in all measured dimensions.

* The Multidimensional Poverty Index (MPI) identifies multiple deprivations at the individual level in health, education and standard of living. It uses micro data from household surveys, and—unlike the Inequality-adjusted Human Development Index—all the indicators needed to construct the measure must come from the same survey. Each person in a given household is classified as poor or nonpoor depending on the number of deprivations his or her household experiences. These data are then aggregated into the national measure of poverty.

Using the previous method of calculating HDI there has been substantial progress in the last 40 years for 135 countries for which comparable data are available, and what is more, this has been possible through diverse path ways. The top mover is Oman that invested heavily in education and public health. The next nine movers are China, Nepal, Indonesia, Saudi Arabia, Laos, Tunisia, South Korea, Algeria and Morocco. Incidentally, China is the only one that made the gains because of income as they had earlier made investments in education and public health. Some of the important low-income but substantial gainers are Ethiopia, Cambodia and Benin.

Across regions, the gainers were East Asia, primarily because of China and Indonesia and the Arab countries. The laggards were former Soviet Union and Sub-Saharan Africa and from these three in the former (Belarus, Ukraine and the Russian Federation) and six in the latter (the Democratic Republic of the Congo, Lesotho, South Africa, Swaziland, Zambia and Zimbabwe) showing reductions in life expectancy.

Despite the above-mentioned setbacks in life expectancy,

"The dominant trend in life expectancy globally is convergence, with average life spans in most poor countries getting increasingly close to those in developed countries. In income, though, the pattern remains one of divergence, with most rich countries getting steadily richer, while sustained growth eludes many poor countries."

"Some countries have suffered serious setbacks, particularly in health, sometimes erasing in a few years the gains accumulated over several decades. Economic growth has been extremely unequal, both in countries experiencing fast growth and in groups benefiting from national progress. And the gaps in human development across the world, while narrowing, remain huge."

In South Asia, Iran fares the best (#70); Sri Lanka (#91), Maldives (#107), India (#119) and Pakistan (125) are in the middle HDI countries, whereas Bangladesh (#129), Nepal (#138) and Afghanistan (#155) are among low HDI countries. Data are not available for Bhutan.

As per the current measure of HDI done for 169 countries, the top ten are Norway, Australia, New Zealand, the United States, Ireland, Lichtenstein, the Netherlands, Canada, Sweden and Germany and the bottom ten are Mali, Burkina Faso, Liberia, Chad, Guinea-Bissau, Mozambique, Burundi, Niger, the Democratic Republic of the Congo and Zimbabwe.

IHDI has been applied to 139 countries and the average loss in HDI is 22 per cent. There are variations across regions and dimensions as indicated in the figure/chart given below.

Chart depicting inequality adjusted human development index across regions. © HDR 2010, UNDP

GII, calculated for 138 countries, also varies across regions and dimensions, but the largest contributor to loss is reproductive health. The loss on account of lower empowerment to females is also relatively higher for South Asia and Arab states, as indicated in the figure/chart given below.

Chart depicting loss on account of gender inequality across region and by dimensions (labour market, empowerment and reproductive health). © HDR 2010, UNDP

MPI has been calculated for 104 developing countries using data from household surveys. This as also some other measures used in HDR 2010 has already been discussed in some Oxford Poverty and Human Development Initiative (OPHI) papers. There is also a very lively debate under Let's talk HD. There are variations that one could observe between income-based measures and MPI, as indicated in the figure/chart given below.

Comparing multidimensional and income poverty for selected countries. © HDR 2010, UNDP

(This write-up was first put up in Digital Journal, 5 November 2010, http://www.digitaljournal.com/article/299827.)

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