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HUMAN DEVELOPMENT INDEX (HDI)
The Human Development Index (HDI) is a comparative measure of life expectancy, literacy, education, and
standard of living for countries worldwide. It is a standard means of measuring well being, especially child
welfare. It is used to determine and indicate whether a country is a developed, developing, or underdeveloped
country and also to measure the impact of economic policies on quality of life. The index was developed in
1990 by Indian Nobel prize winner Amartya Sen, Pakistani economist Mahbub ul Haq, with help from Gustav
Ranis of Yale University and Lord Meghnad Desai of the London School of Economics and has been used
since then by the UNDP in its annual HDR. Described by Sen as a "vulgar measure", because of its limitations,
it nonetheless focuses attention on aspects of development more sensible and useful than the per capita income
measure it supplanted, and is a pathway for serious researchers into the wide variety of more detailed measures
contained in the Human Development Reports.
The HDI measures the average achievements in a country in three basic dimensions of human development:
xA long and healthy life, as measured by life expectancy at birth.
xKnowledge, as measured by the adult literacy rate (with two-thirds weight) and the combined primary,
secondary, and tertiary gross enrollment ratio (with one-third weight).
xA decent standard of living, as measured by the log of gross domestic product (GDP) per capita at
purchasing power parity (PPP) in USD.
Each year, UN member styates are listed and ranked according to these measures. Those high on the list often
advertise it, Former Prime Minister of Canada), as a means of attracting talented immigrants (economically,
individual capital) or discouraging emigration.
An alternative measure, focusing on the amount of poverty in a country, is the Human Poverty Index
Methodology
HDI trends between 1975 and 2004
OECD Central and Eastern Europe, and the CIS Latin
America and the Caribbean East Asia
Arab States South Asia
Sub-Saharan Africa
In general to transform a raw variable, say x, into a unit-free index between 0 and 1 (which allows different
indices to be added together), the following formula is used:
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