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HDI Full Form

Last updated date: 17th May 2024
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What is the Full Form of HDI?

If you are confused what HDI or what does HDI stand for, then here is the answer— HDI: Human Development Index. Human Development Index is an acronym for HDI. HDI refers to a statistical tool which is incorporated in order to measure the accomplishment of a country in its socio-economical dimensions, e.g. health & wellness of people, their education, level of income capacity and standard of living. It is formed to focus attention on people and their abilities which should be the main parameter for assessing the development of a country, not just the economic growth.

Full Form of HDI in Economics

You are now aware that HDI stands for Human Development Index and it holds the same meaning in economics too. Established by Indian Economist—Amartya Sen and Pakistani economy strategist— Mahbub ul Haq, HDI was later used by the United Nations for the purpose of analyzing the social and economic development of the countries.

How is HDI Calculated?

HDI is calculated taking into account the four parameters that are as below:

  1. Gross national income per capita: standard of living

  2. Expected years of schooling

  3. Mean years of schooling

  4. Life expectancy at birth

The higher the score of HDI of a country, it displays that the people of that specific country have higher GNP per capita, better standard of living, higher education level and lifespan.

HDI is published by the United Nations Development Programme (UNDP) year by year. It ranks countries based on the idea of HDI report issued in its annual report.

HDI is considered one among the easiest tools to periodically assess the development of a country since it is dependent on all the main socio-economic indicators that are held liable for the economic development.


Components of HDI

Following are the main components of HDI:-

  1. Health

  2. Education

  3. Standard of living

1. Health

The first component of the HDI is considered to be – a long and healthy life – measured by life expectancy. Long-run estimates of life expectancy throughout the globe are displayed in the visualization. For countries where historical records are made available, such as the UK, estimates can stretch out as far back as 1543. Global and regional approximations of UK data extend back to the year 1770.

2. Education

The second component included is – access to education – Expected and average years of schooling— measured by anticipated years of schooling of children at the age of school-entry and further the mean years of schooling of the adult population. Throughout the world, education has been one of the most cardinal drivers and results of global development. In most parts of the, the means of education is now observed as a fundamental right – with pressure on governments to make sure superlative education for all.

3. Standard of Living

It is measured by capturing the GNI (Gross National Income) per capita which includes GDP (gross domestic product) + money flowing from foreign countries (income earned by residents from foreign investments) - money flowing to foreign countries. The developers of the HDI have thought of adding a third dimension – a decent standard of living – and to calculate it by capturing Gross National Income per capita.

For most of human history, our forefathers had been stuck in an arena of poor health, hunger and little access to luxury, formal education and healthy-hygienic lifestyle. Economic growth – specifically over the past few centuries – has enabled some part of the world population to flee from these conditions.

This parameter is adjusted for price alterations over time, and price differences between countries – is measured in international-$ in 2011 prices.

What Does the HDI Shows?

The HDI provides an overall index of economic growth and development. It also includes some limitations and excludes some factors that might have been included, but it does provide an approximate competency to make comparisons on problems of economic welfare – much more than just using GDP statistics display.

Limitations of HDI 

  • Broader divergence within countries. For example, countries like China and Kenya have hugely different HDI scores based upon the region in question. (E.g. north China poorer than south-east).

  • HDI presents long-term changes (e.g. life expectancy) and might not respond to recent short-term alterations.

  • Higher national wealth does not signal welfare. GNI may not necessarily improve economic welfare; since it depends on how it is spent. Economic welfare is also dependent on various other factors, such as – threat of war, pollution level, access to clean drinking water etc.

FAQs on HDI Full Form

Q1. How is the Level of Education Measured in HDI in Economic Analysis?

Answer: You know the full form of hdi in economics, but do you want to know how the components of HDI are being calculated for assessment. Here you will get to know. There are different metrics that are used to assess access to education, quality and attainment of education– covering many of them throughout work on education.

The visualizations presents the two criterions that the HDI considers that are as follows.:

  1. Mean Years of Schooling: It gauges upon the average number of years of total schooling adults that aged 25 years and older have obtained.

  2. Expected Years of Schooling: It computes the number of years of schooling that a child of school entrance age can anticipate to obtain if the current age-specific enrollment rates continues across the child’s life by country.

Q2. What Does the Figure in HDI Mean?

Answer: HDI is calculated based on a certain index of figures. Of the variations means the following:-

  • An index of 0 – 0.49 indicates low development – for example, HDI of Nigeria was 0.42 in 2010.

  • An index of 0.5 – 0.69 indicates moderate development – for example, HDI of Indonesia was 0.6. 3.

  • An index of 0.7 to 0.79 indicates high development – for example, HDI of Romania was 0.76. 4.

  • Above 0.8 indicates very high development – HDI of Finland was 0.87 in 2010.

Q3. How is HDI Important?

Answer: Full form of HDI is Human Development Index and it is a highly useful means of comparing the level of development of countries. GDP per capita singularly is too narrow a sign of economic development and is insufficient to indicate other dimensions of development, such as enrolment in life longevity and school. Thus, the HDI is a wider and more encompassing sign of development than GDP, although GDP still gives one third of the index.