Human Development Index: Indicators and Importance

Human Development Index (HDI) is a tool to measure a country's development based upon its economic and social measurements. The tool was developed to lay down the fact that a country's overall development is not only assessed based on its economic growth but also assessed based on its people and their capabilities.

Both social and economic dimensions of a country consider the health of the people, their education capabilities, their standard of living, and Gross National Income (GNI) per capita.

Human Development Index is calculated through the normal indices of each of the above three factors. Human Development Index is the mean of these indices. HDI is also used to question a country’s national policy and compare the countries with similar GNI per capita to question why the human development of these countries are different despite having similar Gross National Income (GNI) per capita.

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What Is the Human Development Index?

Human Development Index or HDI integrates the significant social and economic aspects of a country to assess the overall development of a country. HDI generally uses the three dimensions of the development of a country's population that include their education, their standard of living, and the health of the people based on which country’s development is assessed.

In the year 1990, the human development index was first used by the Pakistani Economist Mahbub Ul Haq. The index is further used by the United Nation Development Program to rank countries and is considered as one of the best tools to assess the country’s development on the basis of its economic and social measurements.

Indicators of the Human Development Index

The three indicators or factors that represent the different aspects of life include the following:

Longevity: The human’s longevity is measured by life expectancy at birth. The life expectancy at birth means how many years a newly born person is expected to survive in this world. This indicated the element of health in the Human Development Index. 

Education: It is measured by the expected years of schooling life of a child at the school entry age and the mean years of schooling of the adult population.

Mean years of schooling: 

It determines the average number of years of total schooling adults (aged 25 years and above) have received. 

Expected Years of Schooling:

It estimates the number of years of schooling that a child of school entrance age can expect to get if the present age- specific enrollment rates survive through the child's life by country.

Standard of Living: The standard of living of people is measured by Gross National Income per capita adjusted for the price level of the country.

Importance of Human Development Index

The importance of the human development index is that it is an essential indicator of the overall socio-economic conditions of a nation and its residents. Since it takes into account various parameters to determine the development of those areas, it is an effective way to evaluate the performance of every nation.

Consequently, after the survey, every country is awarded a rank by the United Nations Development Programme annually. A higher rank is allocated to the one that has performed well in all or most of the parameters. Likewise, nations that have not fared well in all or most of the parameters attain a lower rank. As a result, HDI acts as a measuring tool that helps in gauging socio-economic conditions of nations every year and also keeps track of the same.

What Are The Consequences And Implications of the Human Development Index?

The HDI is used to show the attention of policy-makers, the media, and non-governmental organizations, and to change the approach from general economic statistics to human outcomes. It was launched to re-estate that people and their proficiency should be the ultimate guidelines for determining the country's development, not economic growth.

The Human Development Index is also used to diagnose  the alternatives of national policy and to find out how two countries with the similar level of income per person can have different human development outcomes. For example, two different countries may have similar incomes per person but have different life expectancy and literacy levels, such that one of the countries has a much higher HDI than the other. These dissimilarities encourage debate on government policies concerning health and education to determine what can be attained in one country is beyond the reach of the other country.

The HDI is also used to represent the discrepancy within countries, across genders, between states or provinces, across ethnicities, and other socioeconomic groupings. Promoting contradictions in such a way has raised the national debate in many countries.

Limitations of the Human Development Index

Despite the communist idea behind the concept of the human development index, the statistical measure is largely simplified. The present version of the HDI calculation considers only a few factors that affect the development of a country.

To come up with a more accurate analysis of a country's development, other factors such as employment opportunities, empowerment movement, and feeling of security should be considered in index calculations.