The New Human Development Index: What is it All About?

In November 2010, the UNDP introduced its New Human Development Index which has 8 significant changes comprising its strengths and drawbacks a copy of which you can find on page 56 of our reference material.

What the HDI shows

• The HDI gives an overall index of economic development. It has some limitations and excludes several factors that might have been included, but it does give a rough ability to make comparisons on issues of economic welfare - much more than just using GDP statistics show.

Limitations of Human Development Index

• Wide divergence within countries. For example, countries like China and Kenya have widely different HDI scores depending on the region in question. (e.g. north China poorer than south-east)
• HDI reflects long-term changes (e.g. life expectancy) and may not respond to recent short-term changes.
• Higher national wealth does not indicate welfare. GNI may not necessarily increase economic welfare; it depends on how it is spent. For example, if a country spends more on military spending - this is reflected in higher GNI, but welfare could actually be lower.
• Also, higher GNI per capita may hide widespread inequality within a country. Some countries with higher real GNI per capita have high levels of inequality (e.g. Russia, Saudi Arabia)
• However, HDI can highlight countries with similar GNI per capita but different levels of economic development.
• Economic welfare depends on several other factors, such as - threat of war, levels of pollution, access to clean drinking water.

Criticism of the Human Development Index (HDI)

Critics argue that the HDI assigns weights to certain factors that are equal trade-offs, when these measurements may not always be equally valuable. For example, countries could achieve the same HDI through different combinations of life expectancy and GNI per capita. This would imply that a person's life expectancy has an economic value.

An additional year of life would add to the GNI and would thus be different in countries with different GNI per capita.

It also correlates factors that are more common indeveloped economies. For example, a higher level of education would tend to lead to higher GNI per capita. Critics argue the benefit or lack thereof of including two highly correlated values when perhaps one would be a better indicator of a country's well-being.

The HDI also fails to take into account factors such as inequality,poverty, and gender disparity.2 A country with a high value for GNI per capita would indicate a developed country, but what if that GNI is reached by marginalizing certain genders or ethnic classes? And what if that GNI is achieved by a small percentage of the population that is wealthy and therefore ignores the poor?

Furthermore, the values of the factors that make up the HDI are bounded between 0 and 1. This means that certain countries that already have high GNIs, for example, have little room to improve in terms of GNI score even if their GNI continues to grow and improve. This same parameter affects the logic of the life expectancy score.

The Bottom Line

Though the HDI is designed to consider other factors besides wealth, allowing a multifaceted examination of global prosperity and emerging market nations, the weaknesses of this measurement lead some critics to challenge its practicality for use in establishing foreign policy. Other factors that influence prosperity are not sufficiently captured by this measurement either.

TheHDIwas introduced to combine three measures -life expectancy(a social measure), education (average number of years of schooling and expected years of schooling- a social measure) andgross national income per capita(an economic measure).

Each of the different measures is then ranked in order. A country with a very high life expectancy will score +1 and a country with a low score will be close to 0. The same is done for the 2 other measures and a final rank order is achieved.

Country

HDI value

Life expectancy (years)

Mean years of schooling (years)

Expected years of schooling (years)

GNI per capita ($PPP)

1. Norway

0.943

81.1

12.6

17.3

47,557

2. Australia

0.929

81.9

12.0

18.0

34,431

3. Netherlands

0.910

80.7

11.6

16.8

36,402

4. USA

0.910

78.5

12.4

16

43,017

5. New Zealand

0.908

80.7

12.5

18

23,737

Country

HDI value

Life expectancy (years)

Mean years of schooling (years)

Expected years of schooling (years)

GNI per capita ($PPP)

183. Chad

0.328

49.6

1.5

7.2

1,105

184. Mozambique

0.322

50.2

1.2

9.2

898

185. Burundi

0.316

50.4

2.7

10.5

368

186. Niger

0.295

54.7

1.4

4.9

641

187. DR Congo

0.286

48.4

3.5

8.2

280

Advantages of using the HDI

• HDI uses 2 types ofsocial data(health and education) and 1 type ofeconomic datawhich means that the measure uses a broad range of information and is not tied up with only one measure. This is a much more accurate measure.
• The information isupdated annuallyand collected by a range of people who ensure that the data is as accurate as possible.

Disadvantages of using the HDI

• Some geographers are still concerned thatwealth(GNI/GDP) still has too much importance within theHDIweighting and that this still means that rich countries can be artificially high in the rankings.
• Some still raise concerns that the HDI is stilltoo simpleand that for a real measure there should be a range of 10 - 15 different measures lumped together into one big composite measure of development.

THE DEVELOPMENT GAP

The Development Gap refers to the widening difference in levels of development between the world's richest and poorest countries. There are many different measures used to assess the development gap.

THE NEW HUMAN DEVELOPMENT INDEX

TheHuman Development Index(HDI) is a statistical tool used to measure a country's overall achievement in its social and economic dimensions. The social and economic dimensions of a country are based on the health of people, their level of education attainment and their standard of living.

The HDI was created to emphasize that people and their capabilities should be the ultimate criteria for assessing thedevelopmentof a country, not economic growth alone.

TheHDI(Human Development Index) is a way tomeasurewell being within a country. ... TheHDIis a veryuseful measure of developmentbecause it includes economic and social indicators which reduces any anomalies. The PQLI is very similar to theHDIbut it includes infant mortality and it'smeasuredbetween 0 and 100.

Questions:

1. Given the current rank of the Philippines at 107th in the New Human Development Index, what possible measures can be done to further raise the country's current standing? Explain