UNDERSTANDING THE HUMAN DEVELOPMENT INDEX AS A MEASURE OF DEVELOPMENT
by Su’eddie Agema
For the slightly informed of us, we hear about the Human Development Index (HDI) many times without really knowing what it entails. We might have an idea that it is done by the office of the United Nations Development Programme and that it was started in 1990. The general slogan associated with as ‘people are the real wealth of nations.’ So, what is it about the HDI? What does it entail and how does it really account as a measurement of development in any way? This article seeks to clear some of these questions and give a basic understanding of the HDI. First, I beg a little diversion in like flows in order to give us a proper foundation to our discussion.
Okay, so we are accustomed to hearing that the Nigerian economy is improving and growing. How come the average Nigerian on the street doesn’t seem to be smiling from stomach satisfaction, though big numbers keep being pronounced as the country’s continuing growth? How is the economy or rather, economic growth and development get calculated? These are the sort of questions that would ordinarily plague one any day. Then, again there is the question of how the normal development of the individual citizen should be measured or seen and a wondering at the basic indicators of development.
There are basically five ways of measuring economic growth and development. The use of Gross Domestic Product (GDP) which calculates the total number of goods and services produced in a country over a period of time, Professors Michael Todaro and Stephen C. Smith in their Economic Development define it precisely to be a measurement of the total value for final use of output produced by an economy by both residents and non-residents [of a particular country]; Gross National Product (GNP) which describes in monetary value the total annual flow of goods and services in the economy of a nation or in other words, as renowned Professor of Economics, M. L. Jhingan puts it ‘an increase in the economy’s real national income over a long period of time; GNP per capita which looks at GNP averaged by the number of citizens in the country; welfare which looks basically (as the name implies) at the welfare of the citizens. Under welfare, we get the question, what has happened basically to the self-esteem of these people, their freedom of choice and life sustenance? Do they have enough to eat? Do they have the choice to say they do not want this so they would do that? You don’t want to eat rice today, so you decide to eat chips. How many people can do that in the country? Well, not entirely but this is somewhat basically what welfare looks at or something like that. Over here too, Jhingan would put his description as ‘a process whereby there is an increase in the consumption of goods and services of the individuals.’ Social Indicators which look at how much we have in terms of facilities, one’s level of education, access to recreation, leisure and entertainment, or maybe nutritional standards, and the like. This is the heading under which you find the Human Development Index (if one is to go by the parameters as set forth by Jhingan in his The Economics of Development and Planning ). The reason for the emergence of the HDI as reported on its website is ‘in part as a result of growing criticism to the leading development approach of the 1980s, which presumed a close link between national economic growth and the expansion of individual human choices. Many, such as Dr. Mahbub ul Haq, the Pakistani economist who played a key role in formulating the human development paradigm, came to recognize the need for an alternative development model due to many factors’
The basic premise of the HDI is as contained in its very first edition’s sentence: ‘People are the real wealth of nations.’ It was started in 1980 by Mahbub Al-Haq and his friend/colleague, the Nobel award winning Economist, Amartya Sen (who wrote the introduction to the 2010 HDI report). Classically, the Human Development Index has three indicators that they used to measure development. They included life expectancy, real GDP per capita, and maximum adult literacy rate in the country. In the words of the HDI definition (2010 Report) it is a ‘composite index measuring average achievement in three basic dimensions of human development— a long and healthy life, knowledge and a decent standard of living.’ It measures the maximum value of all these values in the world, the minimum value and looks at the value of individual countries. Todaro and Smith say the HDI is the ‘most ambitious attempt to analyse the comparative status of socioeconomic development systematically and comprehensively’
From here, we get to note that despite the richness abounding in certain places, there are deprivations. The HDI accounts for the mass poverty stricken people that exist in given nations. It is the reason why while measures like GDP or GNP would give Nigeria a pass mark for growth, it would receive a ‘small’ minus (0.423) on the HDI book falling into the Low Human Development category ranking 142 out of the 169 countries indexed (2010 Report). From such figures, one finds it easy to compare the level of the development of individuals of one country against the other. One finds Norway at the top of the tops (at 0.938) with Zimbabwe taking the lead from the rear (at 0.140). There are twenty-five other countries listed but fully computed. The rankings place such known names as the United States (0.902) at 4th and United Kingdom (0.849) at 26th. Tunisia (at 0.683) taking its place at 81 falls into the group of High Human Development and the highest ranked African country. From these little ranks, the state of development especially at the individual level becomes more obvious to even a casual observer. It helps to make one realise that even countries that are not so loud are more developed and perhaps, more favourable to stay in. It brings surprises to a number of uninformed people to note that such countries as Ireland, Belgium and other less mentioned (quiet) names would be more developed than the United Kingdom as the ranking portray.
The HDR allows several well meaning countries to know how they fare in development rankings in the world and work hard to improve in order to enhance their status and feel proud among the committee of nations. There is a publishing of the global HDR in addition to 700 National and Regional HDRs. So, it becomes a thing of a race to improve records and have better reports in their favour in the next edition of the HD reports. It also allows these countries to know how they are faring in certain quarters as compared to others and work at either sustenance or improvement. This is what Helen Clark, Administrator of the United Nations Development Programme (2010), that the HDI is under, states in her Foreword to the 2010 report; ‘Perhaps most important, the human development approach has profoundly affected an entire generation of policy-makers and development specialists around the world – including thousands within UNDP itself and elsewhere in the UN system.’
In the end, one has to wonder as to how the HDI measured? Okay, it involves some mathematics whose formula is given here (if you really don’t like Mathematics like a lot of us, there is no problem, just jump this paragraph and continue your reading!) Well, the measurement is to take the value of these three variables in a country and minus it from the minimum, then divide the maximum world value from the minimum
Dimension Index = Actual Value – Minimum Value . (1)
Maximum Value – Minimum Value
All these are then, averaged (divided by three) and the value given as the Human Development Index of the country. Todaro and Smith explain further that the HDI attempts to rank all countries on a scale of 0 (lowest human development) to 1 (highest human development) based on three goals or end products of development: longetivity as measured by life expectancy at birth, knowledge as measured by a weighted average of adult literacy (two-thirds) and mean years of schooling (one-third), and standard of living as measured by real per capita gross domestic product adjusted for the differing purchasing power parity of each country’s currency to reflect cost of living and for the assumption of diminishing marginal utility of income.’
When placed against the other maximum and minimum values of life expectancy, adult literacy rate and Gross National Income, plus the figure in one’s country, the figure is gotten for a country. This figure when computed is used to classify a country into four different groups; Very High, High, Medium and Low Human Development. It is also from this classification that the various countries are ranked, in the case of the 2010 report, Norway taking the lead in human development across the world to the 169th Zimbabwe.
With the 2010 report, the dimensions for calculating HDI has come to be life expectancy at birth; mean years of schooling and expected years of schooling; and Gross National Income per capita . The 2010 version, which is the 20th anniversary issue of the HDI added some parameters which were viewed separately. As Helen Clark puts it: ‘Three new measures – capturing multidimensional inequality, gender disparities and extreme deprivation – are introduced…The Inequality-adjusted HDI, Gender Inequality Index and Multidimensional Poverty Index, building on innovations in the field and advances in theory and data, are applied to most countries in the world and provide important new insights.’ Indeed, it keeps evolving and getting more complicated to get more detailed reports for the betterment of the world.
For twenty years, this one and counting on, the HDI has faithfully reported a true reflection of human development across several countries and continents with methods that they keep changing to get truer figures and facts. In addition to a publication of the global HDR and about 700 National and Regional HDRs, it has sought to suggest ways that life can be made better. As reported in the 2010 edition, ‘the 1990-1994 HDR called for poverty focused international development agendas based on a compact between developed and developing countries. These compact was to have more operational goals, that “global targets for human development” including halving income poverty, and similar goals for basic education, primary healthcare, safe water and malnutrition. These HDRs also advocated participatory national development strategies grounded in realistic budgets to achieve these goals – and in different ways heralded the Poverty Reduction Strategy Papers, the Millennium Declaration, and the Millennium Development Goals that emerged at the end of the decade.’ All these are in addition to contributing greatly to awareness and policies related to human security, human rights and sustainable development. At the National level, they have evolved to describing how social exclusion as a multidimensional concept in the shift from socialism and in the wake of conflict (Bosnia and Herzegovina); effects of armed conflict on people’s lives (Colombia); and relationship between citizen insecurity and human development (Costa Rica).
While the HDI is not the perfect tool for economic measurement or development (can there be any one perfect with the varying problems of not getting accurate data), it surely stands out as one of the most credible especially considering on its concentration on the human beings as the focal point of development and nothing else. Isn’t development meant to be people centred? Why would we have roads or schools or even money if it does not have any effect on human beings? So, in the end it turns out that it is the true development of the human and its measure that would be the distinct and unique call of any true indicator of development. Which other measure does one use except the Human Development Index and its most valuable Reports? With its other functions that have helped to change our worlds in so many ways, it calls for a celebration and more recognition. It is constructive to quote extensively from Todaro and Smith’s again; ‘Although there are some valid criticisms, the fact remains that the HDI, when used in conjunction with traditional economic measures of development, greatly increases our understanding of which countries are experiencing development and which are not. More important, by examining each of the three major components of the HDI-adjusted real per capita income, life expectancy, and literacy and schooling measures and not by disaggregating a country’s overall HDI to reflect income distribution, gender, regional, and ethnic differentials, as presented in some of the recent Human Development Reports, we are now able to identify not only whether a country is developing but also whether various significant groups within that country are participating in that development’
Now, you would understand where to check for Nigeria or any other country’s real development, or what do you think?