Unpacking the 2013 Human Development Index

Tony Payne - Director of SPERI

It is in fact a brilliant report, absolutely full of extraordinarily interesting data and evidence that merit detailed unpacking by political economists.  The main story, as above, is obviously about the cumulative impact of differential rates of economic growth.  In particular, it’s about the achievements of more than 40 ‘developing countries’ (stretching our minds, in other words, way beyond a focus just on China, India and Brazil) that performed better in trade, in attracting foreign direct investment and in setting up effective technology partnerships than would have been predicted in, say, 1990.

What’s so interesting too are the three key factors, or ‘drivers of development transformation’, as they are described, that UNDP identifies as having contributed most to the economic progress of these countries. They are:

• a proactive developmental state

• tapping of global markets

• determined social policy innovation.

As the Report notes, ‘these drivers are not derived from abstract conceptions of how development should work; rather, they are demonstrated by the transformational development experiences of many countries in the South’.  It goes on, rather gently perhaps considering what is being said here: ‘Indeed, they challenge preconceived and prescriptive approaches: on the one hand, they set aside a number of collectivist, centrally managed precepts; on the other hand, they diverge from the unfettered liberalization espoused by the Washington Consensus’.

So there is plenty of politics in this new HDR, with the UNDP seeking to occupy the middle ground.  But there is also something else of real importance, namely, its demonstration, yet again (for the 22nd time actually), that there does exist a more nuanced, more subtle, more human way of measuring societal progress than the narrow god of Gross Domestic Product.  The Human Development Index ought to be better known and more widely deployed in political debate in all countries of the world, including the UK.

What is it, then, and how is it calculated?  Well, it was created in 1990 by the Pakistani economist Mahbub ul Haq who drew on a team of eminent development economists (which meant that they were trained to think beyond the neoclassical mainstream), including most famously Amartya Sen. Although ul Haq supplied the political grit by insisting on an index, it was Sen’s work on capabilities and functionalities that provided the HDI’s conceptual underpinning.

The Index is worked out by combining three different dimensions of development:

1. a long and healthy life, as measured by life expectancy at birth

2. an education index, calculated by reference to the mean years of schooling experienced by adults aged 25 years and the expected years of schooling of a 5-year-old child

3. a decent standard of living, as measured by Gross National Income at Purchasing Power Parity per capita.

The resulting HDI is the geometric mean of these three normalised indices.  In other words, plenty of powerful number-crunching goes on, but importantly the variables seek to mix economic and social considerations.  The result is a very important, but generally under-deployed, tool of analysis.

How different would politics be if excited press attention built up towards the announcement of the latest HDI?  Instead, we fixate politically, certainly in the UK and lots of other countries too, on whether or not flaky, immediate and often subsequently adjusted calculations of quarterly GDP growth figures reveal single-, double- or triple-dip recessions!

What, then, does the 2013 HDI reveal about the condition of this new and diverse world?  The traditional Western capitalist countries still do pretty well, because of their accumulated build-up of capacity over a long historical period.  The ‘top ten’ countries in rank order in the latest HDI are: Norway, Australia, the United States, the Netherlands, Germany, New Zealand, Ireland, Sweden, Switzerland and Japan.  There is perhaps a social democratic, or at least ‘welfarist’, message in that list.  And the big ‘emerging countries’, of which we hear so much, even from the UNDP?  How do they fare? The list shows that China is still only 101st (although Hong Kong is calculated separately and placed 13th); India is 136th; and Brazil 85th.

You want to know, don’t you, by now?  Where is the UK positioned? The answer is 26th, just above the Czech Republic and Greece – a disappointing performance surely for the first country to experience what we have come to call development.