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Knowledge centre for MBA students. |
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Development: Meaning,
Measurement and Strategies - Part Two of
ten Dr Y Subba Reddy, Faculty, Institute for
Financial Management and Research (IFMR), Chennai. Indicators of Human Development
Capturing all the dimensions of development either through
a single measure or a composite measure is riddled with many difficulties. The Human Development Index (HDI) The first Human Development Report introduced a new way of
measuring development - by combining indicators of life expectancy,
educational attainment and income into a composite human development index,
the HDI. In 1995, Of the 174 countries ranked, 98 rank higher on HDI than on
GDP per capita (PPP$), suggesting that they have converted economic
prosperity into human capabilities very effectively. This achievement is
noteworthy for such low-income countries as The Human Poverty Index (HPI) Rather than measure poverty by income, the HPI uses
indicators of the most basic dimensions of deprivation: a short life, lack of
basic education and lack of access to public and private resources. The HPI concentrates
on the deprivation in the three essential elements of human life already
reflected in the HDI: longevity, knowledge and a decent living standard. The
first deprivation relates to survival: the vulnerability to death at a
relatively early age and is represented in the HPI by the percentage of
people expected to die before age 40. The second dimension relates to
knowledge: being excluded from the world of reading and communication and is
measured by the percentage of adults who are illiterate. The third aspect
relates to a decent standard of living, in particular, overall economic
provisioning. This is represented by a composite of three variables: the
percentage of people with access to health services and to safe water, and
the percentage of malnourished children under five. Estimates of the HPI for developing countries have been
worked out for 77 countries with comparable data by Human Development Office
of the World Bank. The HPI value reflects the proportion of people affected
by the three deprivations - providing a comparative measure of the prevalence
of human poverty. Human Development Report (HDR) 1998 reveals the following:
1. The HPI for developing countries ranges from 3% in Trinidad and Tobago to
62% in Niger. 2. Other countries with an HPI of less than 10% are Chile,
Uruguay, Singapore and Costa Rica. 3. The HPI exceeds 50% in Mali, Ethiopia,
Sierra Leone, Burkina Faso and Niger. 4. The HPI exceeds 33% in 32 countries,
implying that an average of at least a third of the people in these countries
suffer from human poverty. A comparison of HDI and HPI values shows how well - or
poorly - the average achievements in a country are distributed. China and
Egypt have similar levels of overall human development, but the HPI for China
is only 17%, while that for Egypt is 34%. Similarly, Kenya and Pakistan are
at par in the HDI, but the HPI for Kenya is less than 30% and that for
Pakistan is more than 45%. This reveals that the fruits of human development
are distributed more inequitably in Egypt and Pakistan than in China and
Kenya. Human Expenditure Ratio
The human expenditure ratio - the percentage of national
income devoted to human priority concerns - is the product of the following
three ratios: 1. The public expenditure ratio: the percentage of national
income that goes into public expenditure. 2. The social allocation ratio: the
percentage of public expenditure earmarked for social services. 3. The social
priority ratio: the percentage of social expenditure devoted to human
priority concerns. The human expenditure ratio is a powerful operational tool
that allows policy-makers who want to restructure their budgets to see
existing imbalances and the available options. If public expenditure is
already high (as in many developing countries), but the social allocation
ratio is low the budget will need to be reassessed to see which areas of
expenditure could be reduced. Military spending, debt servicing and
loss-making public enterprises are often likely candidates. If the first two ratios are high, but the ultimate human
development impact, as reflected in human development indicators, is low the
social priority ratio must be increased. For the poorest countries, this is
likely to involve seeking a better balance between expensive curative hospitals
and preventive primary health care, between universities and primary schools
and between focusing greater attention on the cities and on the rural areas,
where most poor people live. For example, Pakistan and Indonesia have a low human
expenditure ratio, despite reasonable overall levels of public expenditure.
The reason is that their social allocation and social priority ratios are
low. The republic of Korea, on other hand, directs a large share of its
relatively small public budget towards social priorities and has, as a
result, much better human expenditure ratios, while others have particularly
high social priority ratios. Aid ratios
Aid budgets, like government expenditures, can be examined
through four ratios: 1. The aid expenditure ratio - the percentage of a
donor's GNP that it gives in aid. 2. The aid social-sector ratio - the
percentage of each donor's aid that go to the social sector. 3. The aid
priority ratio - the percentage of social sector aid committed to human
priority areas. 4. The aid human expenditure ratio - the product of the three
foregoing ratios, is thus the percentage of donor's GNP going to human
priority areas in recipient countries. Gender-related Development Index (GDI) Gender-related Development Index (GDI) measures the
achievement in the same basic capabilities as the HDI does, but takes note of
inequality in achievement between women and men. The methodology used imposes
a penalty for inequality, such that the GDI falls when the achievement levels
of both women and men in a country go down or when the disparity between
their achievements increases. The greater the gender disparity in basic
capabilities, the lower a country's GDI compared with its HDI. The GDI is
simply the HDI discounted, or adjusted downwards, for gender inequality. The
GDI thus, reflects gender imbalances in basic health, education and income. The HDR 1998 presents the GDI calculated for 163
countries. The human development achievements of women fall below those for men
in every country, and the shortfall in the GDI relative to the HDI reflects
this inequality. There are other interesting features of the GDI: 1. For 60
of the 163 the GDI rank is lower than the HDI rank. This shows the unequal
opportunities that women face relative to men. For several countries the GDI
rank falls short of the HDI rank by 20 points or more: Oman, Saudi Arabia,
the Islamic Republic of Iran, the Syrian Arab Republic, Algeria, Libya and
the United Arab Emirates, in descending order. 2. The GDI rank falls short of
the HDI rank by 10 points or more in such industrial countries as Ireland and
Malta. 3. For 82 countries the GDI rank exceeds the corresponding HDI rank.
The countries with a GDI rank more than 10 points higher than the HDI rank include
12 in Eastern Europe and the Commonwealth of Independent States (CIS). Only
three countries outside this region - Thailand, Jamaica, and Sri Lanka - have
a GDI rank more than 10 points greater than the HDI rank. Gender Empowerment Measure (GEM) Gender Empowerment Measure evaluates progress in advancing
women at the political and economic level. It examines whether women and men
are able to actively participate in economic and political life and take part
in decision-making. While the GDI focuses on expansion of capabilities, the
GEM is concerned with the use of those capabilities to take advantage of the
opportunities of life. At the top of the GEM rankings are three Nordic countries
- Sweden, Norway, and Denmark, each with high levels of human capabilities
and many opportunities for women to participate in economic and political
activities. Some developing countries do even better than industrial
countries on the GEM. Trinidad and Tobago and Barbados are ahead of the
United Kingdom and Ireland. Cuba and Costa Rica are ahead of France and
Israel. China and Mexico are ahead of Japan. [To be continued] |
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