Human Development: Not without Growth

The justification for the construction of progressively sophisticated indices of human development has been that economic growth by itself, measured by per capita GDP, is an insufficient indicator of the all-round development or well-being of a country’s people. This is conventional wisdom by now and the publication of the annual Human Development Report of the United Nations Development Programme, which has been in the forefront of efforts at compilation of ever more comprehensive measures of human development, is received with a great deal of interest and attention. The Human Development Report 2000, released recently, marks further advance in this direction through the inclusion of political and civil rights as another indicator of human development since “only with political freedom – the right for all men and women to participate equally in society – can people genuinely take advantage of economic freedoms”. The authors of the report point out that of the 174 countries covered, 97 rank higher on the human development index (HDI) than on per capita GDP (measured in purchasing power parity terms) and for 69 countries the HDI rank is lower than the GDP per capita rank. The considerable effort of constructing the HDI would thus seem to be vindicated.

The tables in the HDR 2000 can, however, be somewhat differently read as well. The rankings of countries by the HDI and by economic performance or GDP per capita do not exactly coincide in a large majority of cases, it is true. The differences, it is no less true, in very many cases are too small for much meaning to be attached to them, given the imprecision inevitably involved in the methods used to turn qualitative characteristics denoting human development into numbers to derive the indices to compare and rank countries vastly different in their sizes and populations as well as their geographical, economic, political, social and cultural situations. On the other hand, using a broader brush, more legitimate perhaps, what stands out is the positive association between economic performance and level of human development. The HDR 2000 divides the countries into high, medium and low in terms of human development achievement and the 46 high achievers, it turns out, are also by and large the highest income per capita countries. The exceptions are a few one-time communist countries like Hungary, Poland, Estonia and Slovakia, though even their GDP per capita is significantly higher than that of the large majority of countries with poorer human development ranks. (The Russian Federation itself ranks lower at 64 with a lower per capita GDP as well.) On the other hand, Sri Lanka, the much acclaimed exemplar of human development despite low GDP per capita, ranks only 84, around the middle of the 93 countries in the medium human development category.