Sunday, March 04, 2007

The Human Development Index (HDI)

This essay is meant to counter the views of many middle and upper class Indians who believe that India is exceptional; those who believe that India should try and will become a "super power"; those who believe that we are a mere generation from attaining a developed country status; and those who believe that India is simply a better country to live in than what they call "Muslim" countries such as Iran or African countries such as Namibia.
The United Nations Development Program (UNDP) introduced the Human Development Index (HDI) in 1990. here is a link to the Human Development Report (HDR) home page:
The HDI was introduced principally based on Nobel Laureate Amartya Sen and Martha Nassbaum's principle that "human capabilities" had a role in defining well-being of humans. They defined ends (such as liberty) as more important than means (having money). They defined some parameters to measure such ends, such as bodily health and control over one's environment.
In India, we focus a lot (in the past few years) on GDP growth; GDP as a measure of a nation's health has been criticised for a long time, because it focusses on the means. For example, if oil is spilled in our seas often and we clean it up often, the GDP includes the amount aspent on cleaning up those spills as a measure of growth!
The most common reason why GDP is confused with the well-being of a society is because of 2 reasons:
1. People believe that growth "trickles down" to poorer people.
2. When it fails to trickle down and causes income disparities, governments wiill correct that situation.
Both these assumptions have never been proved true, although most educated people in India take it for granted. hence the exclusive focus on GDP in India over the past few years.
What we have in India is called by Sen and Dreze as "unaimed opulence".

A partcularly crude version, consists of attempting to maximize
economic growth, without paying any direct attention to the transformation of
greater opulence into better living conditions.

The UNDP says:
People are the real wealth of a nation. The basic objective of development is to create an enabling environment for people to enjoy long, healthy and creative lives.

The definition of HDI
The HDI includes three components of human capabilities:
Health, Education and a decent Standard of Living.
Health is represented by Life Expectancy
Education by Literacy and School Enrollment
Standard of Living by GDP per capita

Where do nations stand in HDI?

In 2006, Norway, Iceland and Australia ranked in the top 3.
India stood at 126; above us at 125 is Namibia.
Iran is at 96. Indonesia is at 108. Almost all Arab countries are better ranked. Lebanon is at 78 (50 ranks ahead of us).
China is at 81. Oman at 56.
Cuba (oh, those communists) is at 50 (70 ranks ahead).
Almost all Western European countries (which are generally socialist) occupy the first 20 ranks. the USA for all its power is at rank 8.
Over the last 10 years of "development" in India, India has gone from 128 to 126.

So the next time someone goes prattling about how backward Muslim countries are or about how developed we are, quote the HDI at them.


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Sridhar said...

This HDI statistics is just as accurate as the other ones economists throw at us. I don't disagree that we have a long way to go for a good standard of living in terms of health and wealth. But using a statistical information to prove it is just good or bad as using another statistics to boast that we are a great nation.

Do you need a thermometer to prove that it is cold when you feel cold?

Ramiah Ariya said...

The HDI staitstics is not just about accuracy - nobody is debating the accuracy of our growth statistics. The debate is about what to focus on - are we correct in focussing so much on infrastructure and FDI without improving primary education or health. Is the Moon mission necessary? Should our roads focus so much on heavy vehicle transport at the cost of pedestrians? These questions are never honestly debated.
That is the power of HDI - it shows other parameters that we SHOULD focus on but do not, merely because we are taken in by the magic of GDP and other growth statistics.
Trickle-down economics has been accepted by many Indian elite as standard although it has little by way of proof.
I do not know of other UN statistics that boast that we are a great nation - almost all statistics on human development indicators show we are on bad straits.

Pradeep said...


It is not a question of choosing between roads for heavy vehicles and footpaths for pedestrians. We need both. India needs good infrastructure but it also needs healthy citizens, especially children. The key is to find the right balance between the needs of the industry and those of the people. They are both important; it's not a zero-sum game. We need economic growth because without growth the country cannot provide for the basic needs of its citizens. I have lived in China for many years and seen tremendous improvement in the quality of its roads, airports and railways, which in turn has laid a strong foundation for its economic growth. In some respects, the quality of life in China has improved a great deal. But for some people, who have lost the protection of the socialist state, it has decidedly worsened since Deng Xiaoping's reforms began in 1978. Like India, China is also searching for that balance that I talked about above. As an open society, I think India is better placed to find that balance than China. China faces severe environmental problems as a result of its rapid growth over the past 25 years. Its political system and institutions, however, lack the resilience to deal with these problems in an inclusive and effective way. Hopefully, India will not repeat China's mistakes as it tries to ramp up its economic development (not just growth!).



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