Human Development Index 2020

Context: The Human Development Index was released recently by the United Nations Development Programme (UNDP).

Relevance:
Prelims: Economic and Social Development Sustainable Development, Poverty, Inclusion, Demographics, Social Sector initiatives, etc.

Mains: GS I- Population and associated issues, poverty and developmental issues.

• What is Human Development?
  • “Human development is a process of enlarging the range of people’s choices, increasing their opportunities for education, health care, income and empowerment and covering the full range of human choices from a sound physical environment to economic, social and political freedom.”
  • Thus, enlarging the range of people’s choices is the most significant aspect of human development.
  • People’s choices may involve a host of other issues, but, living a long and healthy life, to be educated, and have access to resources needed for a decent standard of living including political freedom, guaranteed human rights and personal self-respect, etc. are considered some of the non-negotiable aspects of human development.
• What is HDI?
  • The Human Development Index (HDI) is a statistic composite index of life expectancy, education, and per capita income indicators, which are used to rank countries into four tiers of human development.
  • A country scores a higher HDI when the lifespan is higher, the education level is higher, and the gross national income GNI (PPP) per capita is higher.
  • It was developed by Pakistani economist Mahbub ul Haq and was further used to measure a country’s development by the United Nations Development Programme (UNDP)’s Human Development Report Office.
  • The 2010 Human Development Report introduced an Inequality-adjusted Human Development Index (IHDI).
  • While the simple HDI remains useful, it stated that “the IHDI is the actual level of human development (accounting for inequality)”, and “the HDI can be viewed as an index of ‘potential’ human development (or the maximum IHDI that could be achieved if there were no inequality)”.
• Origin
  • The origins of the HDI are found in the annual Human Development Reports produced by the Human Development Report Office of the United Nations Development Programme (UNDP).
  • These were devised and launched by Pakistani economist Mahbub ul Haq in 1990, and had the explicit purpose “to shift the focus of development economics from national income accounting to people-centric policies”.
  • To produce the Human Development Reports, Mahbub ul Haq formed a group of development economists including Paul Streeten, Frances Stewart, Gustav Ranis, Keith Griffin, Sudhir Anand, and Meghnad Desai.
  • Nobel laureate Amartya Sen utilized Haq’s work in his own work on human capabilities.
  • Haq believed that a simple composite measure of human development was needed to convince the public, academics, and politicians that they can and should evaluate development not only by economic advances but also improvements in human well-being.
• Dimensions: The HDI combining three dimensions:
  • A long and healthy life: Life expectancy at birth
    • The long and healthy life dimension is measured by life expectancy at birth.
    • The life expectancy at birth is a statistical measure that an average individual is expected to live based on certain demographic factors such as the year of birth and current age.
  • Knowledge: Mean years of schooling and Expected years of schooling
    • This is a second dimension in the HDI. The indicators of education are the expected years of schooling and the mean years of schooling.
    • According to the UN, the average maximum years of schooling is 18 years, while the mean maximum years of schooling is 15 years.
  • A decent standard of living: GNI per capita (PPP US$)
    • The standard of living is usually measured by the gross national income (GNI) per capita.
    • The GNI indicates the total domestic and foreign output created by the residents of a certain country.

• Inequality-adjusted Human Development Index (IHDI)
  • The IHDI combines a country’s average achievements in health, education, and income with how those achievements are distributed among the country’s population by “discounting” each dimension’s average value according to its level of inequality.
  • Thus, the IHDI is the distribution-sensitive average level of human development.
  • Two countries with different distributions of achievements can have the same average HDI value.
  • Under perfect equality, the IHDI is equal to the HDI but falls below the HDI when inequality rises.
  • Difference between the IHDI and HDI
    • The difference is the human development cost of inequality, also termed – the overall loss to human development due to inequality.
    • The IHDI allows a direct link to inequalities in dimensions, it can inform policies towards inequality reduction and leads to a better understanding of inequalities across populations and their contribution to the overall human development cost.

• Significance
  • It is multidimensional as it includes indicators such as literacy rate, enrollment ratio, life expectancy rate, infant mortality rate, etc.
  • It acts as a true yardstick to measure development in a real sense.
  • Unlike per capita income, which only indicates that a rise in the per capita income implies economic development, HDI considers many other vital social indicators and helps in measuring a nation's well-being.
  • It helps as a differentiating factor to distinguish and classify different nations on the basis of their HDI ranks.
• Limitations of the Human Development Index
  • Despite the revolutionary idea behind the concept of the HDI, the statistical measure is greatly simplified.
  • The current version of the Human Development Index calculations considers only a few factors that affect the development of a country.
  • 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
  • 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, etc.|