Life expectancy Rank Country Life expectancy 1 Japan 83.4 136 India 65.4 171 Nigeria 51.9 In pairs, how can you explain the difference in these figures

Economic Development What do most people think is the best measure of Economic Development? Growth in GDP surely? What are the problems using GDP? Measurement problems hidden economy, subsistence farming currency values Income distribution and equity Is it the same as living standards? political freedom social/cultural/ environment Crime health

Any other way to measure development In groups, if you had a blank canvas, think of up to 10 indicators you might want to use in a measure of economic development, and then narrow this down to 3. Why these?

Development of HDI This is the task that was given to UN economists just over 20 years ago The intention was to find a measure which could replace GDP growth in policymakers minds as the principal measure of Economic Development According to Amartya Sen, development is about creating freedom for people and removing obstacles to greater freedom. Greater freedom enables people to choose their own destiny. Obstacles to freedom, and hence to development, include poverty, lack of economic opportunities, corruption, poor governance, lack of education and lack of health. From the UN report on Human Development, Human development is the expansion of people’s freedom to live long, healthy and creative lives

So what is the Human Development Index A composite measure of economic development Combines 3 factors in equal weights: GNI per capita (at PPP weights). This is included to represent material well being Life expectancy at birth measures the health and longevity of the population Education, measured by the number of years at school, to represent access to knowledge (and the potential to improve wellbeing) Developed and used by the UN since 1990 Quoted as an index and listed in rank Index 1 to 0.8 = very high level of HD 0.8 to 0.7 = high 0.7 to 0.55 = medium 0.55 and below = low http://report.hdr.undp.org/

HDI vs GDP HDI emphasises that people and their capabilities should be the ultimate criteria for assessing the development of a country HDI can be used to question national policy choices – how can 2 countries with the same level of GNI per capita end up with different human development outcomes?

So you tell me the pros and cons Country HDI HDI rank GNI per capita ($000) GNI per capita rank Life exp LE rank Expected years schooling Expected years school rank Japan 0.89 17 36.7 24 83.6 1 15.3 42 Kuwait 0.814 46 85.8 3 74.3 78 14.6 54 India 0.586 135 5.2 129 66.4 11.7 124 Nigeria 0.504 152 5.4 125 52.5 177 9.0 166

Pros It has fulfilled a basic mission of moving the debate on from GDP growth, which does not measure human development, adding key factors The HDI can be used to question national policy choices Quite easy to collect the data New factors are predictive of economic growth? Does education shift the AS curve? A single figure. Simple to understand, and easy to use in modelling

Cons The HDI notably fails to take account of qualitative factors, such as cultural identity and political freedoms (human security, gender opportunities and human rights for example). The GNI per capita figure – and consequently the HDI figure – takes no account of income distribution But latest reports do have an index adjusted for inequality It does not take into account Carbon (global warming) – though most of the 2011 UN report talks to this

Conclusion The United Nations HDI is intended to allow economists to draw broad conclusions about which countries enjoy relatively high standards of living, and which are, by comparison, under-developed. Whilst the HDI index has faults – there could always be more factors included – it has fulfilled a basic mission of moving the debate on from GDP growth It allows for questioning of government policies There is now an iHDI, which adjusts for inequality Note UN has all sorts of other measures as well – lots of good reading material available

http://www.ted.com/talks/hans_rosling_reveals_new_insights_on_poverty?language=en