Introduction

The index was developed in 1990 by Pakistani economist

Mahbub ul Haq, Sir Richard Jolly, with help from Gustav Ranis
of Yale University and Lord Meghnad Desai of the London
School of Economics.

It has been used since then by UNDP in its annual Human
Development Report.
3/16/2013
1
REGMI MILAN _FOREIGN_AID_01
What is HDI ???
3/16/2013
REGMI MILAN _FOREIGN_AID_01
2
The HDI combines normalized measures of life
expectancy, literacy, educational attainment, and GDP per
capita for countries worldwide.
It is claimed as a standard means of measuring human
developmenta concept that, according to the United
Nations Development Program (UNDP), refers to the
process of widening the options of persons, giving them
greater opportunities for education, health care, income,
employment, etc.
The basic use of HDI is to measure a country's
development.

The HDI combines three basic dimensions
3/16/2013
REGMI MILAN _FOREIGN_AID_01
3

Life expectancy at birth, as an index of population health
and longevity.
Knowledge and education, as measured by the adult
literacy rate (with two-thirds weighting) and the combined
primary, secondary, and tertiary gross enrollment ratio
(with one-third weighting).
Standard of living, as measured by the natural logarithm
of gross domestic product (GDP) per capita at purchasing
power parity (PPP) in United States dollars.





4
Human Development

A standard definition of human development (1990
HDR):

[] a process of enlarging peoples choices to live lives
they have reason to value The most critical ones are to
lead a long and healthy life, to be knowledgeable and to
enjoy a decent standard of living.

A broader definition (2010 HDR):
Human development is the expansion of peoples
freedoms to live long, healthy and creative lives; to
advance other goals they have reason to value; and to
engage actively in shaping development equitably and
sustainably on a shared planet





5

Measuring is as more relevant than ever
Quantifying and describing our changing world
Finding ways of improving peoples well-being:
o Informed policy making and advocacy
Human development is an evolving idea
As the world changes analytical tools change
But there is a persistent importance of the chain:
Concepts Measurements Impacts




6
Human Development Index
Emphasizes that outcomes for people and their
capabilities should be the ultimate criteria for assessing
the progress of a country, not economic growth alone.


Accounts for average achievements in
life expectancy (proxy for leading a long and healthy
life),
education (proxy for being knowledgeable) and
income per capita (proxy for command over resources
to have a decent standard of living).





7
Human Development Index (Contd.)

A simple index (non-comprehensive) with the purpose of
- initiating discussions
- attracting attention to issues that prevent countries
from performing at a higher level
- international comparison and benchmarking
- temporal comparison

3/16/2013
REGMI MILAN _FOREIGN_AID_01
8
OECD
Central and eastern Europe, and the CIS
Latin America and the Caribbean
Arab States South Asia
Sub-Saharan Africa
East Asia
Dimensions Of HDI
3/16/2013
REGMI MILAN _FOREIGN_AID_01
9
HDI
EI
GDP HI
FORMULAE
3/16/2013
REGMI MILAN _FOREIGN_AID_01
10
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:

x-index =

where and
are the lowest and highest values the
variable x can attain, respectively.

CALCULATION
3/16/2013
REGMI MILAN _FOREIGN_AID_01
11
The Human Development Index (HDI) then represents
the average of the following three general indices:
Life Expectancy Index =
Education Index =
Adult Literacy Index (ALI) =
3/16/2013
REGMI MILAN _FOREIGN_AID_01
12

Gross Enrollment Index (GEI) =
GDP Index =
Thank you for your Patience !
3/16/2013
REGMI MILAN _FOREIGN_AID_01
13