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The Human Development Index—A New Development Indicator?

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The Human Development Index—A New Development Indicator? A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Trabold-Nübler, Harald Article — Digitized Version The human development index—A new development indicator? Intereconomics Suggested Citation: Trabold-Nübler, Harald (1991) : The human development index—A new development indicator?, Intereconomics, ISSN 0020-5346, Verlag Weltarchiv, Hamburg, Vol. 26, Iss. 5, pp. 236-243, http://dx.doi.org/10.1007/BF02928996 This Version is available at: http://hdl.handle.net/10419/140315 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu DEVELOPMENT INDICATORS Harald Trabold-Nebler* The Human Development Index - A New Development Indicator? "Development" can be defined and measured in a great variety of ways. The human development index used by the United Nations Development Programme represents an attempt to place the emphasis on human welfare rather than on the progress of the national economy. This index, however, contains a number of conceptual flaws, which are discussed in the following article. The author proposes a modified version of the index to circumvent the problems. n May 1991, the United Nations Development Every day 40,000 children die, most of them from I Programme (UNDP) published the second Human preventable causes. Approximately 1.5 billion people do Development Report (HDR 91). While most other not have access to safe water and still lack basic health international organisations have been releasing annual care. Over a billion adults are still illiterate2 According to reports for many years, UNDP was reluctant to do so. It the World Development Report 1991, morethan one billion seems to be more than coincidence, however, that the first people live on less than one dollar a day.4 This does not Human Development Report (HDR 90) was published at seem to support the optimistic view of UNDP, which is the end of the "lost decade" claiming that "...developing backed by the HDI. It is therefore no surprise that the HDI countries have made significant progress towards human relaunched the discussion about the meaning and development in the last three decades... North-South gaps measurement of development. While most contributions in human development narrowed considerably during this to this discussion focus on the pros and cons of the period even while income gaps tended to widen. ''1 While concept of human development, this article will the World Bank and many other organisations still focus on concentrate on the discussion of the human development economic and social development, UNDP places human index. The following section will present the definition and beings at the centre of all development efforts. Instead of measurement of human development as proposed by asking: how much is a nation producing? UNDP asks: how UNDR Subsequently, irritating characteristics of the HDI are its people faring ? Human development is viewed as an will be addressed which limit its capacity for measuring alternative to economic and social development and even socio-economic progress. After a discussion of some to human resource development. 2 Consequently, UNDP conceptual flaws in the HDI a modified version of the index uses a different indicator-the human development index is presented which circumvents many of the problems with (HDI) -to assess progress in developing countries. UNDP's HDI. Comparing the HDI with GNP per capita, which is still the most widely used development indicator, UNDP finds that Defining and Measuring Human Development the Third World is much better offthan GNPfigures lead us Although human development constitutes a new to believe. The two curves in Figure 1, where countries catchword in development economics, this concept of have been ranked by GNP per capita and the HDI, highlight assessing a country's development performance merely that income disparities between countries are much greater than human development disparities. However, Cf. UNDP: Human Development Report 1990, Oxford, p. 17. this should not be interpreted as if the development 2 Cf. M. Desai: Human development, in: European Economic process has finally succeeded in providing the people in Review, 1991, Vol. 35, p. 350. developing countries with what they need for a decent life. 3 Cf. UNDP: Human Development Report 1991, Oxford, p. 24. 4 Cf. World Bank: World Development Report 1991, Washington D.C., * Deutsches Institut for Wirtschaftsforschung, Berlin, Germany. p. 1. 236 INTERECONOMICS, September/October 1991 DEVELOPMENT INDICATORS represents a revival of the positions of the seventies. 5 The the poverty level ($4,829) contributes only marginally to HDI itself is reminiscent of the Physical Quality of Life human development. In order to reflect these diminishing Index (PQLI), which was intensively discussed at the returns of income, real GDP per capita is transformed 9 into beginning of the eighties, when the basic needs strategy adjusted GDP per capita which is used as the income had reached its peak. 6 Despite its intellectual appeal, most variable. analysis based on the PQLI never gained much influence The construction of the HDI is a three step process. in development policies. ~ Firstly, a measure of deprivation in each of the three UNDP defines human development as "... a process of dimensions was defined. Based on data for 160 countries, enlarging people's choices. The most critical ones are to the lowest and highest values of each variable were lead a long and healthy life, to be educated and enjoy a defined as a minimum and maximum. The deprivation of decent standard of living. Additional choices include each country in any of the three dimensions was then political freedom, guaranteed human rights and self- defined by the distance of the observed value from the respect... ''8 Thus, the concept of human development maximum, normalized into a 0-1 scale. In the second step reflects two sides, the formation of human capabilities, the average deprivation indicator was calculated by such as skills, knowledge and health, and the command adding the values of each dimension by country and over resou rces enabling people to use their capabilities. In dividing bythree. In thethird stepthe HDI was calculated by order to measure human development the HDR 91 subtracting the average deprivation index from one. Thus, identifies three basic dimensions - longevity, knowledge the HDI can assume values from 0 to 1. The higher the HDI, and income - which are considered essential for human the higher the level of human development relative to all development. The attainment in each dimension is other countries for one particular year. measured by one or two variables. Current life expectancy is used as the variable to measure longevity. Educational Comparison between HDI and GNP ranks attainment, a composite variable embracing adult literacy The HDI attracted a lot of attention, especially because and mean years of schooling, serves as a measure of of the disparities found in comparing the per capita GNP knowledge. Income is measured in real GDP per capita rank and the HDI rank. According to the HDI, Japan is (Kravis dollars). UNDP thinks, however, that income above ranked first with an HDI value of 0.993, while according to GNP per capita Switzerland is in first place. Sierra Leone is Figure 1 ranked last with an HDI value of 0.048, while according to Ranking of Countries' GNP per capita and HDI GNP per capita Ethiopia is ranked last. Poor educational GNP attainment causes most Arab states to lose up to 49 ranks per capita Human devel0pj:n~nt ind ex US ~ t hou s a nd s in HDI when compared to GNP per capita. On the other 1.0 t hand, high literacy rates combined with a high life 20 expectancy let many of the countries with low or medium 0.9 income gain up to 51 ranks in HDI when compared with 18 GNP per capita. 1~It is therefore no wonder that ever since 0.8 Human UNDP published its first HDR, economists, politicians and 16 development journalists have debated and analysed the shortfalls and index merits of the HDI. 0,7 14 The critics of the HDI can be broadly divided into two 0,6 12 groups. Representatives of the first group are convinced that development problems are essentially economic 10 0,5 s Cf.G. Pyatt : Poverty, in: European Economic Review, 1991, Vo1.35, 8 p. 358. 0.4 e Cf. Overseas Development Council: Measuring the condition of the 6 world's poor, Oxford 1979. 0.3 7 Cf. K.W. Menck : Neuorientierung der Entwicklungspolitik? - Der I. Index der menschlichen Entwicklung, Rissener Rundbrief 11, 1990, p. 367. per capita 0.2 e Cf. UNDP (1990), op. cit., p. 10. 2 g See technical note for details on UNDP's method for transforming real GDP into adjusted GDP. Source : Human Development Report 1990. lo Cf. UNDP (1991), op. cit., pp. 119-121. INTERECONOMICS, September/October 1991 237 DEVELOPMENT INDICATORS problems. The stimulation of economic growth is development by one single index at all, instead of looking considered the most important tool required to foster at individual figures of each and perhaps more development.
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