Development Indices

Development Indices with Particular focus on Human

Development Index (HDI)

Dr. M. Abu Eusuf

Professor, Department of Development Studies

University of Dhaka

E-mail: eusuf101@yahoo.com

Phone: 9634580, 01711287444

MDS 11, University of Dhaka

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Issues to be Covered

Development Indicators

Development Indices

Human Development

Human Development Index including Hands-

on-exercise

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Development Indicators

Every development indicators is based on a particular

concept or definition of development, involving specific

values, goals and standards.

In the 1960‘s development was considered as an

increase in per capita income and hence the indicator

used in that period was GNP per capita.

GNP per capita - a necessary condition for

development

In the 1980s – Development emerged as a

multidimensional concept

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Development Indices…

Physical Quality of Life Index (PQLI)

Human Development Indices:

Human Development Index (HDI)

Human Poverty Index (HPI) HPI-1 for Developing countries & HPI-2 for OECD countries

Gender-related development index (GDI)

Gender empowerment measure (GEM)

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Development Indices…

Physical Quality of Life Index (PQLI)

measure the quality of life or well-being of a

country.

Developed in 1979 by Morris Davis Morris

Indicators: basic literacy rate, infant mortality,

and life expectancy at age one.

criticized because there is considerable overlap

between infant mortality and life expectancy

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Development Indices…

Human Development Indices:

Human Development Index (HDI) A long and healthy life (Life expectancy at birth)

Knowledge (Average years of schooling and expected years of

schooling)

A decent standard of living (GNI per capita - PPP US$)

Human Poverty Index (HPI) HPI-1 for Developing countries &

HPI-2 for OECD countries

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Development Indices…

HPI-1 for Developing countries

Deprivation in a long and healthy life (Probability at

birth of not surviving to age 40)

Deprivation in Knowledge (Adult illiteracy rate)

Deprivation in a decent standard of living (Percentage

of population not using an improved water source &

Percentage of children under weight-for-age)

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Development Indices…

HPI-2 for OECD countries

Deprivation in a long and healthy life (Probability at

birth of not surviving to age 60)

Deprivation in Knowledge (Percentage of adults

lacking functional literacy skills)

Deprivation in a decent standard of living (Percentage

of people living below the poverty line)

Social exclusion (Long-term unemployment rate)

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Development Indices…

Gender-related development index (GDI)

GDI adjusts inequalities between men and women

Gender empowerment measure (GEM) Political participation and decision-making (Female and male

shares of parliamentary seats)

Economic participation and decision-making Female and male

shares of positions as legislators, senior officials and managers

& Female and male shares of professional and technical

positions

Power over economic resources (Female and male estimated

earned income)

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Human Development

In Dicken‘s novel Hard Times Mr. Bounderby

observed that nothing would satisfy his workers, what

the workers really needed, beyond a living wage, was

to be treated like human beings.

Human Development, which is an approach

developed in the context of the UN system, tries to

combine growth with a people – centered approach to

development, and has become an important synthesis

in development thinking.

The Human Development Approach is concerned to

establish that income growth alone doesn‘t always

automatically lead to improved quality of life for all.

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The State of Human Development

―The basic objective of development‖, wrote Mahbub ul Haq in

the first Human Development Report in 1990, ―is to create an

enabling environment in which people can enjoy long, healthy and

creative lives.‖

People are the real wealth of nations. That simple truth is

sometimes forgotten.

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Human Development Index (HDI)

The Human Development Index (HDI) is a

comparative measure of life expectancy, education,

and standard of living for countries worldwide.

It is a standard means of measuring well-being

The index was developed in 1990 by Indian Nobel

prize winner Amartya Sen, Pakistani economist

Mahbub ul Haq, with help from Gustav Ranis of Yale

University and Lord Meghnad Desai of the London

School of Economics and has been used since then

by the United Nations Development Programme in its

annual Human Development Report.

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Human Development Index (HDI)

The Human Development Index (HDI) is a summary

measure of key dimensions of human development.

It measures the average achievements in a country in

three basic dimensions of human development:

a long and healthy life,

access to knowledge and

a decent standard of living.

The HDI is the geometric mean of normalized indices

from each of these three dimensions.

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Components of Human Development Index

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Components of Human Development Index

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Human Development Index

A long and healthy life is measured by life

expectancy.

Access to knowledge is measured by:

i) mean years of schooling for the adult population,

which is the average number of years of education

received in a life-time by people aged 25 years and

older; and

ii) expected years of schooling for children of school-

entrance age, which is the total number of years of

schooling a child of school-entrance age can expect to

receive if prevailing patterns of age-specific enrolment

rates stay the same throughout the child's life.

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Human Development Index

Standard of living is measured by Gross National

Income (GNI) per capita expressed in constant 2005

international dollars converted using purchasing

power parity (PPP) rates.

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Categories of Human Development Index

Very High Human Development Index:0.900 -1

High Human Development Index: 0.699-0.899

Medium Human Development Index:0.522-

0.698

Low Human Development Index: HDI below

0.521

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Human Development Report 2010

—20th Anniversary Edition

The Real Wealth of Nations: Pathways

to Human Development‗The first Human Development Report in 1990 opened with the simply stated

premise that has guided all subsequent Reports: ―People are the real wealth of a

nation.‖

By backing up this assertion with an abundance of empirical data and a new way

of thinking about and measuring development, the Human Development Report

has had a profound impact on development policies around the world.‘

This 20th anniversary edition features introductory reflections by the Nobel Prize–

winning economist Amartya Sen, who worked with series founder Mahbub ul Haq

on the conception of the first Human Development Report and contributed to and

inspired many successive volumes.

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Human Development Report 2010

—20th Anniversary Edition

The 2010 Report continues the tradition of pushing the frontiers of development

thinking.

As Amartya Sen writes: ―Twenty years after the appearance of the first Human

Development Report, there is much to celebrate in what has been achieved. But

we also have to be alive to ways of improving the assessment of old adversities

and of recognizing—and responding to—new threats that endanger human well-

being and freedom.―

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Bangladesh’s HDI Value and Rank -2013

The 2013 Human Development Report presents

Human Development Index (HDI) values and ranks for

187 countries

Bangladesh‘s HDI value for 2012 is 0.515—in the low

human development category—positioning the country

at 146 out of 187 countries.

Between 1980 and 2012, Bangladesh‘s HDI value

increased from 0.312 to 0.515, an increase of 65

percent or average annual increase of about 1.6

percent.

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HDI Ranking based on HDR 2013The Rise of the South:

Human Progress in a Diverse World

HDI Rank Country HDI Value

1 Norway .955

2 Australia .938

3 USA .937

11 Canada .911

26 UK .875

92 Sri Lanka .715

136 India .554

146 Bangladesh .515

146 Pakistan .515

157 Nepal .463

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HDI Trends (1980 – 2012): Bangladesh

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Trends in Bangladesh’s HDI component indices

1980-2012

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Trends in Bangladesh’s HDI 1980-2012

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Bangladesh’s HDI indicators for 2012 relative to

selected countries and groups

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Hands-on-exercise:

Steps to calculate the Human Development Index

There are two steps to calculating the HDI.

Step 1. Creating the dimension indices

Minimum and maximum values (goalposts) are set in

order to transform the indicators into indices between

0 and 1.

The maximums are the highest observed values in the

time series (1980–2012).

The minimum values are set at 20 years for life

expectancy, at 0 years for both education variables

and at $100 for per capita gross national income

(GNI).

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Steps to calculate the Human Development Index

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Steps to calculate the Human Development Index

Having defined the minimum and maximum values, the

subindices are calculated as follows:

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Human Development Index (HDI)

Each of the indices is computed according to

the following general formula:

Index = [Actual Value – Minimum Value]/

[Maximum Value – Minimum Value]In general to transform a raw variable, say x, into a unit-free

index between 0 and 1 (which allows different indices to be

added together), the following formula is used:

•x-index =

where and are the lowest and highest values the

variable x can attain, respectively.

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Steps to calculate the Human Development Index

For education, equation 1 is applied to each of

the two subcomponents, then a geometric mean

of the resulting indices is created and finally,

equation 1 is reapplied to the geometric mean

of the indices using 0 as the minimum and the

highest geometric mean of the resulting indices

for the time period under consideration as the

maximum.

This is equivalent to applying equation 1 directly

to the geometric mean of the two

subcomponents.

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Steps to calculate the Human Development Index

Step 2. Aggregating the subindices to produce

the Human Development Index

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Example: Ghana

Hands-on-exercise for Ghana

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Steps to calculate the Human Development Index

Example: Ghana

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Steps to calculate the Human Development Index

Example: Ghana

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Hands-on-exercise for Bangladesh

Example: Bangladesh

Indicators Value

Life expectancy at birth (years) 69.2

Mean years of schooling 4.8

Expected years of schooling 8.1

GNI per capita (PPPS) 1,785

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Hands-on-exercise for Bangladesh

Example: X

Indicators Value

Life expectancy at birth (years) 79.2

Mean years of schooling 8.8

Expected years of schooling 12.1

GNI per capita (PPPS) 4,785