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Success and Failure in Human Development (Ranis and Stewart)

maggio 18, 2011

The paper “Success and Failure in Human Development”, written by Ranis and Stewart, offers an interesting research to understand the relationship between some variables of Human Development and Human Development Index.

The comparison is based on some data, which refer to a period of 37 years, from 1970 to 2007, to identify, observing the results of the various countries, which are the patterns that led to the success or failure in the HDI.

Countries are divided into some groups and then the research is structured in three parts:

The first part compares the results in HDI with other variables of HD, considered as causal of HDI, and compares also individual patterns of behavior that led to the result.

The second part compares the results in HDI with some essential dimensions of the Human Development but not closely correlated with the HDI. In this section are also analyzed the patterns that led to the performances.

Finally, there is a focus on six countries to understand which specific situation, beyond the data, developed the success or failure.

The countries that are included in the research are developing countries that, in 1970, had a population of at least one million people.

The first section is organized in three groups of six countries each, according to the HDI level in 1970 (HIGH, MEDIUM, LOW). Each group includes three GOOD PERFORMERS (GP) and three BAD PERFORMERS (BP) according to the HDI results obtained in these 37 years. Performances are based on both the growth rate and shortfall reduction. This system has been used to don’t penalize countries that start from a very high level of HDI, and vice versa.

The variables considered in this first section are more or less direct causes of the HDI, and are six :

1) expenditure on social services as a percentage of GDP. 2) primary and secondary enrollment rates. 3) Female to male primary enrollment ratio. 4) income and GDP per capita rates 5) income distribution, measured with Gini index. 6) poverty rates.

In the selection of variables must be considered that the enrollment rates and per capita income growth are directly included in the calculation of the HDI.

The results of the comparisons are not very homogeneous.

– Expenditure on social services increased, on average, across countries GP, but there are some examples of increase in social ependiture between BP and a decrease in the GP.

– As might be expecte, the enrollment rates (3 and 4) are on average higher in GP, even if are increased almost for every country.

– About what concerns income inequality, it has worsened on average less in the GP than in BP, with some exceptions.

– For both per capita income and GDP, the results are better among the GP, but there are some countries that have achieved positive results even among the first group BP (HIGH HDI).

– In the case of poverty indicators, the results are positive for almost all countries, however, are conforting among the most GP countries.

What emerges from the study of patterns is extremely interesting.

– Among the countries that started from a high level of HDI, the success has been achieved thanks to what Dreze and Sen called process “growth mediated”, where  growth of income is positively correlated with HD, provided that it passes through increase in social expenditure and indicators of education.

– Unlike the countries that started from middle and lower levels of HDI, success has been achieved through the so-called “support-led” process, where the main role is taken by a balanced program of social services such as health care, education and relevant social arrangements.

– Then there is the special case of Tunisia (listed as GP), which reached an improvement of HDI with good expenditure on social services, good economic growth and weak increase of equity distribution.

– Finally, isolated cases of Indonesia and Laos, wich are among the GP (MEDIUM HDI) due to an increase in per capita income and GDP, rates of enrollment and a low Gini, without a sustained increase in expenditure on social services, particularly in the case of Laos.

Bad Performers countries are all characterized by low economic growth. What emerges is that the persistent negligence of the economic sector leads inexorably to the weakening of the social aspects and vice versa. This is the fundamental connection that seems to lead to the deterioration of the HDI.

In this first point the economic improvement seems to be a key feature for the improvement of the HDI, however, this is true in the long run, only if supported by social indicators.

The second part, entitled “beyond the HDI” is, in my opinion, far more interesting than the first. Ranis and Stewart consider five indicators, which are not closely related to the HDI, but are linked to human development.

The five indicators are: 1) Political Rights and Civil Liberties 2) Environmental Sustainability 3) income inequality 4) Conflict and Violence 5) Gender empowerment.

The results are very interesting:

– There is not a close link between a high level of “political rights and civil liberties” and an improvement in the level of the HDI, as well as for the GE.

– Regarding the inequality of income distribution, it is bad among the GP in the first group, but we can’t say the same for the other two groups where the situation is reversed.

– In the first group, the homicede ratio are particularly high in most countries. Lower levels, between the GP, are found in the other two groups, confirming the idea that there is less violence in countries with better performances in the HDI.

– The number of years in political conflict does not seem to have a clear link with improvements of HDI, while the reverse is true for improvements in the number of years in conflict. In fact, improvements can be seen between the GP, where the data are more available, with the exception of Nepal, which instead shows an unusual increase.

– Finally, the enviromental substainability does not seem to have any connection with the HDI. High values can be found among the GP countries and as among BP countries.

In conclusion of this point it is important to emphasize that “good performance on the HDI does not necessarily mean that countries also perform well on other dimensions of Human Development”. I’ll discuss this point at the end of my article.

The section about the patterns, in fact, shows no close relationship between the variables and the HDI.

It doesn’t appear that the values of variables in favor of human development are better among GP rather than BP.

This conclusion is very interesting, because it confirms the argument that the HDI is a partial measure of human development and that tends to focus its attention only on certain dimensions, ignoring others.

In this argument “Oxford Poverty and Human Development Initiative” called “missing dimensions” the fact that the HDI lose part of the information, explained by several variables not included in the calculation.

Alkire (2007), to contribute to this argument, proposed five dimensions excluded from HDI view: Employement, empowerment or agency, phisical safety, the ability to go about without shame, psychological and subjective well-being.

However, we can’t overlook that, charging a huge amount of variables within a single indicator, could increase the complexity and limit the utility of the index. The HDI is especially important for having shifted the focus on achievements, rather than on income, putting in crisis the GDP, something that no other index has ever done before.

The third part of the paper focuses on six countries such as Bangladesh, Indonesia, Chile, Laos, between the GP, and Zambia and Kazakhstan between the BP. However, those are very special cases, each one with its own past, so it is difficult to find a central thread that leads to success rather than failure.

In fact, the final conclusions reached by Ranis and Stewart, are that it is not possible to define similar patterns that lead to success rather than failure.

Also with regard to variables “beyond the HDI” the result is similar or even stronger.

Of course, when are compared variables such as violence or gender inequality, we would not expect to achieve certain results. Countries like Mexico, Panama, Tunisia, Indonesia and Chile have improved their position, while getting bad results in inequality of income distribution, political rights, violence and conflicts.

The results do not reflect what was hoped to demonstrate: that best results in the HDI reflects best results in HD variables. It reinforces the critical to HDI as a restricted indicator of human development.

Overall, the role of economic growth seems crucial, but the result is amplified by the fact that it is a variable included in the calculation of the Human Development Index.

If you delete the various exceptions, it is possible to identify two kinds of development, in full agreement with the thesis of Sen, a “growth mediated”and one “support-led”, but the results are too rough.

It also appears that the persistent neglect of the institutions in some areas inevitably leads to failure. This is in total accord with Sen, which argues that economic growth can be very important to improve people’s lives, but the fact to focus the attention only on this aspect has limitations that should be seriously understood.

Still, there are too many isolated cases, so, this problem, in my opinion, is caused by the difficulty to find some common schemes among few countries with very heterogeneous characteristics.

About Human Development we know that the aim is to enanche the quality of people’s lives and expand their freedoms. It is undeniable that this is possible improving at the same time different aspects as life expectancy, education, health, poverty and political rights. In accorting to Amartya Sen, there can’t be freedom and better quality of life witouth tip in conjunction each of these aspects because each is connected to the other.

Consider the comparison between China and India posed by Sen (15/05/11 Sole 24 Ore) where, in the firstone, better rates of life expectancy, infant mortality, education, education and health than India. In wich, despite bad healt situation, there is a certain social harmony thanks to democracy, more political rights, freedom of speech and press.

Therefore we could say that many aspects are important simultaneously.

As I argued before, we certainly can’t deprive the primacy of the HDI of having ousted the GDP as the most important indicator of well-being. Nevertheless we have discussed enough about merits and lacks of HDI but, in my opinion, the message that this study provides is to continue go further, considering the Development of a country as something that involves different areas, including the responsibilities of the institutions that led the current crisis in the North African countries.

Giacomo Crisci


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