HDI a good Measurement of Development

Jul 06, 2022 Letters

Dear Editor,

I commend the author DeLisle Worrell for the well written essay on “Human Development Index”, explaining its components. There is one minor flaw — the writer does not tell us what is Guyana’s HDI and how the country measures up against some other Caricom nations And in examining HDI, one must not ignore GDP per capita (person) or annual GDP or GNP growth.

The missive suggests that the writer actually studied and understand development economics as opposed to others who purport to be economist but never took an economics course. The writer is spot on in stating that HDI is increasingly used to measure development post 1990 when the concept was created. HDI has not replaced or supplanted other socio economic indicators but merely supplement them. And it may not be a perfect measurement of development but is a good one.

HDI is a relatively new concept in measuring human development. Post 1990, students of economics have been introduced to this new concept of measurement of human development which gives an index of between 0 and 1. The higher the number generated, after considering a number of features of an economy, the greater is the development and standard of living of the territory.

The social welfare states of Europe and the G7 nations as well as Australia and New Zealand and Singapore (developed economies) have the highest HDI. Guyana is listed as a middle range HDI country. Guyana’s HDI in 1990 was 0.548. As reported on a website, between 1990 and 2019, Guyana’s HDI value increased from 0.548 to 0.682. The HDI value in 2020 slightly went down to 0.645. Guyana is almost at the bottom among Caricom nations barely edging out Belize and Suriname but there is a cluster among Caricom and several Latin nations. African nations are at the bottom of HDI.

Those of us who studied economics pre-1990 learn about GDP and GNP per capita and other indicators of an economy like life expectancy, years of education, % of budget devoted to health care, income of top 10% of the nation; income of bottom 20%, etc. that were used to measure human development and economic progress of a territory. Per capita measurements and other socio economic indicators don’t give an accurate picture of standard of living and quality of life but they provide economists and policymakers with a general understanding of the life of society. The general trends are used to guide policy although in Guyana and poor countries, policy makers didn’t and don’t pay heed to numbers.

HDI captures several indicators like GDP, health care, and education, as Worrel explained. Although not perfect, it is a better measurement than GDP or GNP per capita in terms of human development and standard of living. The other indicators are still used to understand national development and economic progress of a nation, giving an indication of how much resources are directed towards people, the poor in particular. The GINI coefficient also gives a good measurement of standard of living and economic means of a territory’s population — measurements on poverty and variation or disparities in income. The GINI index serves as a gauge of economic inequality in a territory, measuring income or wealth distribution among a population of a territory. The lower the GINI, the less inequality in a society. The social welfare nations of Europe and the G7 outperforms most nations. Guyana had a GINI index of .542 in 1990 that declined to about 0.451 from 1998 onwards. Guyana’s GINI index is average in terms of Caricom nations and is midway in terms of the 190 territories for which data is available.

Yours sincerely,

Vishnu Bisram

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