HUMAN DEVELOPMENT INDEX: A SPECIAL FOCUS ON BRICS COUNTRIES N.GURUVEERA KUMAR* P.KONDAIAH** PROF. D.KRISHNAMOORTHY*** *Academic Consultant, Dept. of Econometrics, S. V. University, Tirupati, A.P., India **Research Scholar, Dept. of Econometrics, S. V. University, Tirupati, A.P., India ***Dept. of Economics, S.V. University, Tirupati, A.P., India ABSTRACT One of the measuring tools of people s standard of living or welfare is Human Development Index (HDI). The BRICS countries achieved significant gains in both an economic and a political sense. As far as demographic and economic progress of the group is concerned, in 2010 BRICS countries collectively accounted for more than 40 per cent of the global population and nearly 30 per cent of the land mass. I have taken place in all the BRICS countries over the last two decades (1990 2010). The main objectives of the study are to know the HDI trends particularly for BRICS countries during the period 1990-2013 and to know the HDI growth rate of BRICS countries during the period 1990-2013. KEYWORDS: BRICS countries, Human Development Index (HDI), Growth INTRODUCTION In any country people are the real wealth of that country. The main goal of Economic development is to expand the people s liberty and standard of living. One of the measuring tools of people s standard of living or welfare is Human Development Index (HDI). The Human Development Index (HDI) was introduced by the United Nations Development Programme (UNDP) in its first report prepared under the supervision of Late Pakistani economist Mahaboob Ul-Haq in the year 1990. HDI mainly measures three basic dimensions for Human development. They are Life Expectancy at Birth, Literacy Rate and GDP Per capita. Life expectancy at birth measures a long and healthy life. The second dimension of HDI is Literacy rate. In this dimension, the knowledge as measured by the adult literacy rate with two-third weight and the combined primary, secondary and tertiary gross enrolment ratio with one- third weight are taken into account in calculating the index. The third dimension of HDI is GDP Per capita as measured on Purchasing Power Parity basis. In this dimension, standard of living and quality of life are measured. 283
Changing Methodology of Construction of HDI Before 2010 Human Development Index (HDI) has been an aggregate measure of progress in three dimensions, viz, health, education and income. HDR 2010, though uses all the three dimensions, they are used in modified manner. In this report, UNDP has modified the indicators used to measure progress in education and income. The manner in which they are aggregated has also been changed. With regard to knowledge dimension, earlier measurement was based on literacy and gross enrolment ratio. This has been replaced by mean years of schooling and expected years of schooling respectively. Expected years of schooling means the years of schooling that a child can expect to receive given current enrolment rates. Mean years of schooling is estimated more frequently for more countries and can discriminate better among countries while expected years of schooling is consistent with the reframing of this dimension in terms of years. In calculating the life expectancy at birth the maximum and minimum values are 85 years and 25 years respectively. With regard to the second dimension of literacy and school enrollment, the maximum and minimum values are 100 and 0 respectively. In Calculating the index of income, the maximum and minimum values are (in PPP US$) 40,000 and 100 respectively. There is also a change in the choice of the average, While before 2010, Arithmetic Mean was taken as the average, after 2010, the Geometric mean is being taken as the appropriate average to compute the indices. The above three dimensions of HDI and the maximum and minimum values used are shown in table-1: Table-1 Changes of HDI Indicators before and after 2010 Before 2010 After 2010 Items Index Unit Maxvalue Min- Value Index Unit Maxvalue Minvalue Health LEI Years 85 25 LEI Years 83.2 20 (at Birth) Literacy EAI a.alr b.cer % % 100 100 0 0 EAI a.mys b.eys Years Years 13.2 20.6 0 0 Standard of Living Per capita income Per capita GDP (PPP US $) 40,000 100 SLI Per capita GNI (PPP US$) 1,08,211 163 Average Arithmetic Mean Geometric Mean Note: LEI: Life Expectancy Index MYS: Mean Years of Schooling EAI: Educational Attainment Index EYS: Expected Years of Schooling SLI: Standard of Living Index PPP: Purchase Power Parity ALR: Adult Literacy Ratio CER: Combined Educational Index 284
The performance of human development is represented as a value between 0 and 1. For any dimension of the HDI, individual indices are calculated by the following formulae. Component Index= Before 2010 the HDI was calculated as a simple average of the three different dimension values, that is HDI= Now HDI is calculated as a geometric mean of the three different dimension values. The computation of HDI is graphically presented in Figure1 Figure-1: Graphical presentation of calculating Human Development Index Methodology of Construction of Human Development Index Dimensions: Long and Healthy Life Knowledge A Decent Standard of Living Indicators : Life Expectancy at Birth Mean Years of Schooling GNI Per capita (PPP US$) Expected years of schooling Indices: Life Expectancy Index Education Index GNI Index Human Development Index(HDI) Source: Adopted from the UNDP, Human Development Report: 2013. Advantages of HDI over Growth Indicator The HDI is preferred over the conventional growth indicators of Real GNP per capita due to the following reasons: i. Human development is the end while economic growth is only a means to this end. The ultimate purpose of the entire exercise of development is to treat men, women and children-present and future generations- as ends, to improve their living conditions and to enlarge their choices. ii. Human development leads to higher productivity. A well- nourished, healthy, educated, skilled, alert labour force can be the most important productive asset. The 285
iii. investments in nutrition, health services and education are justified on the grounds that they enhance productivity of the labour force. Higher level of Human Development helps in lowering the family size by slowing human reproduction. It is the experience of all developed countries that improvement in education levels (particularly that of girls), better health facilities and reduction in infant mortality rates leads to lowering of the birth rates. While improved education facilities make people aware of the benefits of a small family, a higher income level, better standard of living etc., result in reduction of infant mortality rates and reduces the incentive for having large families as there are fewer child deaths now. iv. Human development is good for physical environment also. Deforestation, desertification and soil erosion decline when poverty declines. How do population growth and population density affect the environment is a subject of controversy. The conventional view is that they have a detrimental effect on environment as the poor mostly depend upon the nature for their livelihood. However, Paul Streeten cites recent research to show that (though not accelerating) population growth and high population density, if combined with secure land rights can be good for soil and forest conservation. v. Reduced poverty contributes to a healthy civil society, increased democracy and greater social stability. vi. Human development can help in reducing civil disturbances in a society and in increasing political stability. In view of all these reasons the Human Development Index (HDI) is considered to be a well-reputable indicator of social welfare in present day conditions. Table 2 incorporates the details of achieved life expectancy at birth, mean years of schooling, expected years of schooling and GNI per capita in select group of countries in the three groups viz., Countries with Very High Human Development with HDI value of 0.80 and above, countries with High Human Development with HDI value ranging from 0.70 to 0.80, countries with Medium Human Development with HDI value ranging from 0.50 to 0.70 and countries with Low Human Development with HDI value less than 0.5 along with HDI ranking for these countries. The data presented in Table 2 are based on the findings of HDI Report 2013 published by UNDP. The information was collected from 187 countries. Among the 187 countries, 49 countries were in the Very High Human Development Index category among these category Norway 286
occupies the first position and Argentina occupies 49 th position, 53 countries were in the High Human Development Index category among these category Uruguay occupies 50 th position and Dominican Republic occupies 102 th position, 42 countries were in the Medium Human Development Index category among these category Maldives occupies 103 th position and Equatorial Guinea occupies 144 th position and 43 countries were in the Low Human Development Index category in this category Nepal occupies 145 th position and Niger is occupies last position that is 187 th position and India which was at 135 th position and it is in Medium Human Development Index Category. Table-2 Human Development Index (2013) for selected countries Rank Country HDI Value Life expectancy at Birth Mean years of schooling Expected years of schooling GNI Per capita (PPPUS$) VERY HIGH HUMAN DEVELOPMENT (HDI 0.8 and ABOVE ) 1 Norway 0.944 81.5 12.6 17.6 63,909 2 Australia 0.933 82.5 12.8 19.9 41524 5 United States 0.914 78.9 12.9 16.5 52,308 26 Italy 0.872 82.4 10.1 16.3 32,669 49 Argentina 0.808 76.3 9.8 16.4 17,297 HIGH HUMAN DEVELOPMENT(HDI 0.7 TO 0.8) 50 Uruguay 0.790 77.2 8.5 15.5 18,108 55 Libya 0.784 75.3 7.5 16.1 21,666 57 Russia 0.778 68.0 11.7 14.0 22,617 62 Malaysia 0.733 75.0 9.5 12.7 21,824 79 Brazil 0.744 73.9 7.2 15.2 14,275 91 China 0.719 75.3 7.5 12.9 11,477 102 Dominican Republic 0.700 73.4 7.5 12.3 l 10,844 MEDIUM HUMAN DEVELOPMENT( HDI 0.5 TO 0.7) 103 Maldives 0.698 77.9 5.8 12.7 10,074 118 South Africa 0.658 56.9 9.9 13.1 11,788 120 Iraq 0.642 69.4 5.6 10.1 14,007 135 India 0.586 66.4 4.4 11.7 5,150 144 Equatorial Guinea 0.556 53.1 5.4 p 8.5 21,972 LOW HUMAN DEVELOPMENT ( HDI LESSTHAN 0.5) 145 Nepal 0.540 68.4 3.2 12.4 2,194 150 Myanmar 0.524 65.2 4.0 8.6 3,998 180 Burundi 0.389 54.1 2.7 10.1 749 187 Niger 0.337 58.4 1.4 5.4 873 287
Source: UNDP, Human Development Report 2014. Having discussed the major findings of the HDR-2013, an attempt is made to analyse the status of Human Development in BRICS countries. Evolution and Structure of BRICS Countries The acronym BRICS acronym stands for a loose group of cooperation among the four leading developing countries viz., Brazil, Russia, India, China and South Africa. The idea was first floated in the year 2001 by Goldman Sachs as part of an economic modeling exercise to forecast global economic trends over the next half-century. Taking forward the main finding, another paper by Goldman Sachs in 2003 forecasted the evolving dynamics of the world economy over the next 50 years. The papers, however, did not scope out the possibility that the term coined would be formalised at some point in time. For the next few years after the term was coined (2001 06), the idea of an institutionalised BRIC was floated among the four countries viz., Brazil, Russia, India and China, but there was no specific move to formalise the group. The first move in this direction was made in September 2006 when the first meeting of the BRIC foreign ministers took place, as a side event to the 61 st UN General Assembly in New York. This was followed by several other meetings. In the September 2007 and 2008 meetings, foreign ministers met in a side event to the 62 nd UN General Assembly in New York. The second and third meetings of foreign ministers took place in Russia. Other meetings also took place during 2007 and 2008, including the BRIC Heads of State/Government meeting in July 2008 and the finance ministers meeting in November 2008. At the third meeting of foreign ministers, it was decided to boost co-operation between the four countries on various fronts and in various ways. The broad objective was building a more democratic international system founded on the rule of law and multilateral diplomacy. The immediate focus, however, was to ease the burden of soaring global food prices. The BRIC countries also resolved to work together and with other countries in order to strengthen international security and stability. The move towards formal group took a concrete shape when the BRIC leaders held their first summit on 16 th June 2009 in Yekaterinburg, Russia, calling for a more democratic and multipolar world based on the rule of international law, equality, mutual respect, cooperation, coordinated action, and collective decision making of all states. Since then annual summits have been held in each of the remaining BRIC countries, with the last one being held in India. The inclusion of South Africa into the group expanded the acronym to BRICS in 2010, and since 288
then the new acronym has symbolised the collective economic power of Brazil, Russia, India, China, and South Africa. The BRICS countries achieved significant gains in both an economic and a political sense. As far as demographic and economic progress of the group is concerned, in 2010 BRICS countries collectively accounted for more than 40 per cent of the global population and nearly 30 per cent of the land mass. The group constituted a share of about 25 per cent of the world GDP in PPP terms compared with 16 per cent in 2000. This is expected to rise significantly in the near future. Along with improvements in economic indicators, the group has also realised improvement in social indicators, such as increased literacy levels. Significant positive changes have taken place in all the BRICS countries over the last two decades (1990 2010). The economic size in nominal terms (US dollars) has increased manifold with Brazil by over four times, India nearly five times, China over fourteen times, and South Africa by over three times. The situation further improves if comparison is made based on PPP. China has emerged as the second-largest economy, followed by India in fourth position, Russia in sixth and Brazil in eighth. The increasing trend in GDP is reflected further by a significant increase in per capita income over the last two decades. These have brought in perceptive changes about the potential and importance of BRICS in reshaping the global economic order. The BRICS, now increasingly recognised as some of the fastest-growing countries and the engines of the global recovery process, plays a formidable role in shaping macroeconomic policy, as was observed after the financial crisis. Table- 3: Human Development Index Trends for BRICS Countries (1900-2013) HDI COUNTRY 1990 1995 2000 2005 2010 2012 2013 RANK 79 BRAZIL 0.612 0.747 0.682 0.705 0.739 0.742 0.744 57 RUSSIA 0.729 0.770 0.717 0.750 0.773 0.777 0.778 135 INDIA 0.431 0.546 0.483 0.527 0.570 0.583 0.586 91 CHINA 0.502 0.683 0.591 0.645 0.701 0.715 0.719 118 SOUTH 0.619 0.741 0.628 0.608 0.638 0.654 0.658 AFRICA Source: UNDP, Human Development Report 2014, Datt & Sundaram, Indian Economy, S. Chand Publishing, New Delhi. In the table, we select BRICS countries human development index from different years. Among these countries Russia placed at first position and India at placed last position from the last two decades. 289
Figure-2: Human Development Index Trends for BRICS Countries(1900-2013) The above diagram clearly shows India placed at last position for the last two decades and it never intersect any of the BRICS countries HDI value. Here Russia, Brazil maintains a steady growth level and China increasing the growth level from 0.5 to 0.7 and South Africa fluctuates their growth level from the last two decades. Table-4: Growth Rate for BRICS Countries (1990-2013) COUNTRY 1990 2013 Growth Percentage BRAZIL 0.612 0.744 21.57 RUSSIA 0.729 0.778 6.72 INDIA 0.431 0.586 35.96 CHINA 0.502 0.719 43.22 SOUTH AFRICA 0.619 0.658 6.30 The above table gives us Growth rate for 1990-2013 years. In this table China placed at first position and its growth rate is 43.22%, South Africa placed at last position and its growth rate is 6.30% and India placed at second position and its growth rate is 3.96%. Conclusions: The main goal of Economic development is to expand the people s liberty and standard of living. One of the measuring tools of people s standard of living or welfare is Human Development Index (HDI). HDI mainly measures three basic dimensions for Human development. They are Life Expectancy at Birth, Literacy Rate and GDP Per capita. Human Development Index (HDI) is considered to be a well-reputable indicator of social welfare in present day conditions. The BRICS countries achieved significant gains in both an economic and a political sense. As far as demographic and economic progress of the group is concerned, in 2010 BRICS countries collectively accounted for more than 40 per cent of the global population and nearly 30 per cent of the land mass. Significant positive changes have taken place in all the BRICS countries over the last two decades (1990 2010). The economic 290
size in nominal terms (US dollars) has increased manifold with Brazil by over four times, India nearly five times, China over fourteen times, and South Africa by over three times. The situation further improves if comparison is made based on PPP US$. China has emerged as the second-largest economy, followed by India in fourth position, Russia in sixth and Brazil in eighth. The increasing trend in GDP is reflected further by a significant increase in per capita income over the last two decades. In this overall study China occupied first position and its growth rate is 43.22%, South Africa occupied last position and its growth rate is 6.30% and India occupied second position and its growth rate is 35.96%. References: 1. UNDP, Human Development Report 2014. 2. UNDP, Human Development Report 2013. 3. Datt & Sundaram, Indian Economy, S. Chand Publishing, New Delhi. 4. S.K Misra & V.K Puri, Economics of Development and Planning, Himalaya publications, New Delhi. 5. Syed Waseem Ahmad Ashraf*, Sabbir Ahmed** and Surendra Kaur Rawal***, Indian Journal of Human Development, Vol. 7, No. 1, 2013,Status of Human Development in Murshidabad District of West Bengal. 6. The BRICS countries, Oxford University Press, ISBN: 0-19-808538-9. 291