Human Development and Economic Growth

Report
Human Development and
Economic Growth
African Economic Development
Feb 1st 2007 – Renata Serra
Human Development
The ultimate aim of development
Enlarge people’s capabilities and
freedoms so they can lead longer,
better and healthier lives
Language is often enshrined in a
human rights framework
Right to education
Right to good health
Etc.
The Human Development
Report and Index
The HDR was launched in 1990 by UNDP with the
goals of:
Putting people back at the center of the development
process
Going beyond income to assess people’s long-term wellbeing
The HDI is a summary measure of human
development: it measures the average
achievements in a country in three basic
dimensions:
A long and healthy life: life expectancy at birth
Knowledge: adult literacy rate (with two-thirds weight) and the
combined primary, secondary and tertiary gross enrolment ratio
(with one-third weight)
A decent standard of living: GDP per capita (PPP US$)
The construction of the HDI
HDI gives more info than income alone:
Higher income
may not
translate into
better human
development
(left panel)
Income may
not be
necessary for
improved
development
(right panel)
Uneven human development
Development has
been uneven:
progress for some
but many have
been left behind
20 countries have
experienced
declines in HDI
since 1990
The pros and cons of the HDI
Advantages of HDI:
Ready calculability and possibility of quick comparison
over time and space
Effectiveness in conveying the main message
(dimensions of development may not be closely
correlated)
Problems with HDI:
Simplifies notions of development
Uses arbitrary components and weights
Why not including access to water? Why the weight
associated with education isn’t greater?
Human development and economic
growth
HD and EG affect each other
Q1: What are the channels through which
HD affects EG?
Q2: What are the channels through which
EG affects HD?
From EG to HD
Higher EG leads to greater HD ceteris paribus
Botswana vs Sudan
Patterns of growth and its distributive effects
Lower inequality leads to higher HD
Intra-household distribution of resources and
decision-making
Women’s control of income leads to greater HD
Level and distribution of public sector
expenditures: PEx/GDP and HDEx/PEx
Kenya vs Malawi
Effectiveness in service delivery (efficient use of
public resources)
Low corruption and wastages is good, but also choosing
the sector and intervention with the highest returns
From HD to EG
Education increases: earnings; labor productivity;
adoption of technology in agriculture; firm’s
technology, etc.
Health and nutrition increases: productivity, returns
to schooling in children; etc.
Human capital is a fundamental factor in new
growth theories (R&D)
HD lowers macro inequality and facilitates growth
Investment in HD affects factor endowment,
boosts manufacturing exports and growth
Education lowers fertility rates and increases percapita growth
HD and EG trajectories
Evidence seems to show that HD
should be emphasized from the start
EG lopsided strategy inevitably
plunges a country into a vicious cycle
See
http://hdr.undp.org/hdr2006/statistics/
for the most recent HD data and
interactive information

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