Human Development Index

Three factors of Development Economic Social Demographic

HDI HDI: Human Development Index, created by the United Nations, is a reflection of those three factors The UN selects one economic factor, two social factors, and one demographic factor to compute the HDI The highest HDI possible is 1.0, or 100% Norway: 0.955, Australia: 0.938, US: 0.937, Netherlands: 0.921, Germany: 0.92

Economic Factors The United Nations using gross domestic product per capita as the economic factor for calculating HDI Other economic factors are considered: Types of jobs Productivity Raw Materials Consumer Goods

GDP Per Capita Individuals in MDC (More Developed Countries) typically earn more income than in (Lesser Developed Countries) Per capita income is difficult to calculate in LDCs GDP is the value of the total output of goods and services produced within a country, normally during a year Geographers use GDP per capita instead GDP divided by total population

Types of Jobs Jobs typically fall into three categories: primary, secondary, and tertiary In an LDC, sometimes 75% of workers are in a primary sector, compared to 5% in an MDC In an MDC, jobs have decreased in primary and secondary sectors, and increased in tertiary

Productivity Workers in an MDC are more productive than workers in an LDC Productivity: the value of a particular product compared to the labor used to make it Machinery can help increase productivity

Raw Materials Development requires access to raw materials and energy sources LDCs that have petroleum are able to advance more quickly than those that do not Not all developed countries have raw materials (ex: Japan) Developed through world trade and technology

Consumer Goods Wealth can be divided between necessities (clothing, shelter, and food) and luxuries (television, cars, technology) The type of goods and services purchased by consumers is another indicator of economic development How important is the car? Telephone? Television?

Social Indicators The United Nations uses literacy rate and Gross Enrollment Rate as the social factors for calculating HDI. MDCs use their wealth to provide schools, hospitals, and welfare services Social factors include: Education and literacy Health and welfare

Education and Literacy The higher the level of development, the greater are both the quantity and quality of education The quality of education is measured in the student/teacher ratio and the literacy rate Literacy Rate: the percentage of a country’s people that can read and write Typically 95% in MDC, and less than 33% in LDC

Health and Welfare People are healthier in MDCs Most developed states have socialized healthcare United States is only major developed country where health care is privatized MDCs also offer welfare assistance to help those unable to work Denmark, Norway, and Sweden provide the most welfare assistance

Demographic Indicators The United Nations uses life expectancy as the demographic indicator for HDI. Demographic indicators include: Life Expectancy Infant Mortality Rate Natural Increase Rate Crude Birth Rate

Life Expectancy Better health and welfare cause people in MDCs to live longer Life expectancy: the average number of years a newborn can expect to live at current mortality levels Babies are expected to live to their mid-40s in LDCs, and mid-70s in MDCs MDCs have large number of elderly people, and LDCs have large number of children

Infant Mortality Rate Infant Mortality Rate: The annual number of deaths or infants under one year of age, compared to the number of live births More babies survive infancy in an MDC 90% of infants survive in an LDC 99% of infants survive in an MDC

Natural Increase Rate NIR: the percentage by which a population grows in a year. It is computed by subtracting the CBR-CDR The NIR is about 2% in LDCs, and 1% in MDCs

Crude Birth Rate Crude Birth Rate: the total number of live births in a year for every 1,000 people alive in the society LDCs have higher NIRs, because they have higher CBRs The CBR in an LDC is 40 per 1,000 The CBR in an MDC is 15 per 1,000

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Write this info down Kuwait: Brazil: life expectancy at birth 77.1 years (LE) the adult literacy rate is 93.3% (LR) the education enrollment ratio is 73% (EE) and the gross domestic product per capita is $19,384. (GDP) Brazil: the life expectancy at birth is 70.8 years the adult literacy rate is 88.6% the education enrollment ratio is 86% and the gross domestic product per capita is $8,195

Question 1. Before making any calculations, how do you think these two countries will compare if we use these measures to come up with a single HDI for each country?

Educational Percentage To calculate the HDI, first combine the two measures of education using a weighted average, with a two-thirds weight for the adult literacy rate (ALR) and a one-third weight for the education enrollment ratio (EER). The formula for the weighted average to give the education percentage (EP) as a measure of education is

Educational Percentage

HDI calculations To calculate a single numerical measure of human development, the HDI, we want to combine the measure of health, which is in years, with the measure of education we just found, which is given as a percentage, with the measure of economic well-being, which is given in U.S. dollars.

Question 3. Explain why we cannot combine these values directly with different units (like years, percent, and dollars) into a single measure.

Life Expectancy To convert life expectancy values to a life expectancy index number, we first identify a reasonable minimum and maximum for each of these values. The United Nations uses 25 as the minimum and 85 as the maximum. Then the life expectancy value (LEV) is converted to a life expectancy index (LEI) using the equation

Question 4. Explain why an index number defined this way will be between 0 and 1 and will not have any units (like years) associated with it.

Life Expectancy Index

Educational Index The education percentage (the weighted average of the adult literacy rate and the education enrollment ratio you computed in question 1) is converted to an index value by using a minimum of 0 (percent) and a maximum of 100 (percent). This gives the education index (EI) in terms of the education percentage (EP) as

Educational Percentage

Calculating the HDI For the final conversion to an index value, we convert the gross domestic product per capita in US$ (GDP) to an index value. This is done a bit differently than the previous conversions. Here base-ten logarithms are used so that the effect of a larger GDP value is diminished. (Natural logs may be used as well.) The minimum and maximum values used by the United Nations for the GDP are 100 and 40,000, respectively, and the equation to calculate the GDP index value (GDPI)

GDP Index

Final HDI Index

Final Reflection