Human Development Index (HDI)

The Human Development Index (HDI): an indicator that encompasses three dimensions of “development”

In 1990, the United Nations Development Programme (UNDP) developed a composite indicator: the Human Development Index. The HDI ranks countries based on three equally-weighted and vast criteria: the economy (GDP per capita), health (life expectancy), and education (adult literacy rates and school enrolment rates for children).

The HDI is an average of these three indicators. The basic formula for attaining these three indicators is relatively simple:

(country figure – world minimum) / (world maximum – world minimum)

To illustrate: for life expectancy the world minimum is generally 25 years, and the world maximum, 85 years. A country whose life expectancy is estimated at 75 years would have an index of (75-25)/ (85-25), or 0.83.
The highest-scoring countries have an HDI of 1; other countries rank closer to 0. On average, HDI scores vary from a high of 0.97 to a low of 0.31. The UNDP has established three development levels: low (under 0.5), medium (0.5 to 0.8), and high (0.8 to 1).

The resulting ranking differs considerably from rankings based on GDP per capita. Out of 177 countries studied by the UNDP for its 2006 report, the USA was in only 8th position behind several European countries such as Norway (1st) and Ireland (4th), and also Japan (7th). Southern and south-eastern countries like Hong Kong (22nd) and Singapore (25th), as well as oil-producing countries like the United Arab Emirates (49th), while not ranking lowest, do not edge into the higher-performing ranks.

The ranking based on the HDI could lead to the conclusion that people live better in countries where GDP per capita hovers around USD 9,000, like Uruguay (43rd) or Costa Rica (48th), than in oil-producing countries where GDP per capita exceeds USD 24,000. An overall bleak picture is painted for the African continent. On the whole, African countries are ranked low. Of the 31 countries with an extremely low HDI, only two are not African: Yemen and Haiti.

While the HDI corrects some biases inherent in the GDP rankings, it is not free from criticism. First, the economic factor still weighs heavily. GDP per capita is one of the criteria, yet it is also a factor in life expectancy and education. Second, the low HDI as established by the UNDP is relatively low. Countries such as Sudan and Bangladesh are ranked “medium”. Finally, the HDI does not take environmental degradation into account, and does not question the unsustainable aspects of industrialised societies.