Mon, 10 Jan 2011 18:00:37 GMT
By Hyung-Jin Choi, Martin Heger, Jose Pineda and Francisco Rodríguez
Research Consultant, Research Consultant, Research Specialist and Head of Research (respectively), Human Development Report Office, UNDP
Twenty years ago, the Human Development Index was proposed as an alternative to conventional assessments of development based on measures of per capita income. As is well-known, the HDI complements income with health and education indicators. From the outset, the Report has stressed the great differences in the assessment of country experiences derived from looking at the HDI, as opposed to just economic growth. The 2010 Report reaffirmed this theme in its analysis of progress, showing that there was remarkably little correlation between economic growth and improvements in health and education, even over long periods of time.
At the same time, the role of income in the HDI is somewhat special, as was highlighted by our recent discussion on the new HDI formula. The HDI is designed as a capabilities index, but - unlike health and education - income is not a capability. At high levels of income, the capacity of further income increases to deliver improvements in human development is limited. This is the reason why income is treated differently from health and education in the HDI formula.[1]
Further, to the extent that the contribution of the HDI is to have shown that development is broader than income, we need to understand that part of the HDI that is not directly related to income. In other words, the value-added of the HDI is precisely in its non-income components.
For these reasons, the 2010 Human Development Report for the first time in history published an indicator called the non-income HDI. This is simply a Human Development Index calculated just with health and education – and thus without the income component. The existence of this new index naturally suggests that we ask some basic questions: what countries in the world do best in terms of the non-income HDI? What are the countries that have progressed more rapidly? How does this contrast with the answer given by looking at the HDI, or just at income?
Table 1 lists the top ten countries in the world in terms of the non-income HDI and compares them with the top ten in HDI and the top ten in terms of income. There are some interesting contrasts in the list. While there are six countries that are in the top ten for both non-income HDI and regular HDI, there are four other countries that make it into the top ten in terms of the non-income HDI but not of the regular HDI: Iceland, South Korea, Israel and Japan. When we compare the non-income HDI with the ranking derived from the income indicator, the contrast is much more marked: only 2 countries (the US and Norway) are on both top 10 lists. A notable difference is that several countries from the Persian Gulf (Qatar, Kuwait, and the UAE) make it into the top 10 income list but not into the non-income HDI list.
Table 1. Top 10 non-income HDI countries, 2010
| Rank | Non-income HDI | HDI | Income |
| 1 | Australia | Norway | Liechtenstein |
| 2 | New Zealand | Australia | Qatar |
| 3 | Norway | New Zealand | Norway |
| 4 | Ireland | United States | United Arab Emirates |
| 5 | Iceland | Ireland | Kuwait |
| 6 | South Korea | Liechtenstein | Luxembourg |
| 7 | United States | Netherlands | Brunei Darussalam |
| 8 | Israel | Canada | Singapore |
| 9 | Japan | Sweden | United States |
| 10 | Germany | Germany | Hong Kong, China (SAR) |
Source: Human Development Report 2010
Beyond the top ten, there are key differences throughout the rankings. An interesting way to capture them is by looking at the difference between the HDI ranking and the ranking that would obtain based on income alone. New Zealand is 30 places above in the HDI ranking than it would be in the ranking based on income; Ukraine is 20 positions higher. In contrast, Equatorial Guinea is a whopping 78 positions lower in the HDI than it would be just based on income. And these are not outliers: 79 countries move by ten or more positions by changing from an income ranking to an HDI ranking: that’s 47 percent of the total sample.
What are the developing countries that do best in the non-income dimension?[2] Table 2 below shows the top developing country performers. Latin America and the Caribbean and Europe and Central Asia are the developing regions most heavily represented in this list. The list is topped by Cuba, which ranks 17th in the world, far above the second highest developing country (Chile), which ranks 34th. The top seven countries in this list would graduate to the “very high human development” category if the classification were made solely on the basis of non-income HDI.
Two countries merit special mention: Cuba and Palau. These are countries for which we cannot calculate the regular HDI in 2010 due to unavailability of reliable income information.[3] Thus they are not included in the HDI rankings in the 2010 report. But this does not mean that these countries have low levels of human development – indeed both have levels of non-income human development similar to countries that we consider developed.
Table 2. Top 10 developing countries in terms of non-income HDI, 2010
| Rank | Country | Region | Overall Rank |
| 1 | Cuba | LAC | 17 |
| 2 | Chile | LAC | 34 |
| 3 | Palau | EAP | 36 |
| 4 | Lithuania | ECA | 38 |
| 5 | Montenegro | ECA | 40 |
| 6 | Latvia | ECA | 41 |
| 7 | Argentina | LAC | 42 |
| 8 | Romania | ECA | 43 |
| 9 | Uruguay | LAC | 46 |
| 10 | Georgia | ECA | 49 |
Note: LAC denotes Latin America and the Caribbean, EAP = East Asia and the Pacific, and ECA = Europe and Central Asia
Source: Human Development Report 2010
The above calculations tell us about the top countries in terms of levels of non-income human development. How about if we look at changes over time? In other words, what are the countries that have experienced the fastest progress in non-income human development?
We can answer this question by using the same method for assessing progress introduced in the 2010 HDR. This method compares the rates of progress of countries with those which had a similar initial HDI level – thus controlling for the fact that less developed countries can be expected on average to have higher growth rates in their HDIs over time. Table 3 below shows the “top movers” according to this method, both for the last forty years as well as in the decade since 2000.[4] For the longer-run period, we find that five of the top ten movers are Arab states: Oman, Saudi Arabia, Libya, Algeria and Tunisia. The list of top performing countries based on the non-income HDI is strikingly similar to the top 10 HDI movers presented in the 2010 HDR, with seven countries making it into both lists.
Table 3. Top 10 movers in non-income HDI
| 1970-2010 | 2000-2010 | |||
| Rank | Country | Region | Country | Region |
| 1 | Oman | AS | Rwanda | SSA |
| 2 | Nepal | SA | Burundi | SSA |
| 3 | Saudi Arabia | AS | Yemen | AS |
| 4 | Libya | AS | Indonesia | EAP |
| 5 | Algeria | AS | Maldives | SA |
| 6 | Tunisia | AS | Pakistan | SA |
| 7 | Iran | SA | Kazakhstan | ECA |
| 8 | Ethiopia | SSA | Cuba | LAC |
| 9 | South Korea | EAP | Iran | SA |
| 10 | Indonesia | EAP | Algeria | AS |
Note: AS denotes Arab States, SA = South Asia, SSA = Sub-Saharan Africa, EAP = East Asia and the Pacific, LAC = Latin America and the Caribbean, and ECA = Europe and Central Asia
Source: Human Development Report 2010
While the longer-term list is dominated by Arab and Asian countries, the list for the 2000-2010 period is more diverse, with countries from all developing regions making it to the top ten. Somewhat unexpectedly, the list is topped by Rwanda and Burundi. In both countries, educational improvements were a key driver of progress: Expected years of schooling rose by more than three years in Rwanda and by more than four years in Burundi – up 48 and 74 percent, respectively, since 2000. Similarly, life expectancy increased by eight years in Rwanda and four years in Burundi – significant improvements of 19 and 10 percent, respectively.
Cuba is the only Latin American country in the top ten non-income-HDI movers over the past decade. This shows that even during a period marked by well-known economic hardship, Cuban social indicators have continued to improve, with life expectancy increasing by two years and expected years of schooling increasing by five years. These are remarkable improvements for a country that already had very high health and education indicators at the outset of the decade.
Focusing on the non-income components of human development does not imply that income is unimportant. Any assessment of capabilities has to consider whether people have access to the basic goods and services that allow people to live meaningful lives, and few of those goods (food, shelter, clothing) can be accessed without income. But looking at the non-income HDI reveals that many countries have been able to improve the lives of their citizens - in some cases quite impressively - even without the benefit of high incomes or rapid economic growth.
[1] More precisely, income enters through a log transformation in the formula. See Rodríguez, Francisco (2010) “Interpreting Trade-offs in the HDI”.
[2] For the purposes of this exercise, we classify Cuba and Palau as developing countries. However, since the HDR classification is based on HDI estimates, which are unavailable for these countries due to lack of reliable income data, they are generally not included in either the developing or developed country categories in the HDRs.
[3] Other countries lacking reliable income data include the Marshall Islands and Iraq. Some other countries were dropped due to lack of data on education or health.
[4] The 1970-2010 period uses the “hybrid HDI” discussed in chapter 2 of the 2010 HDR.
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Luis Gutierrez, Editor Pelican Web / Mother Pelican Journal wrote: "Re. Table 2, Cuba in first place. I understand the HDI metrics but, even if the calculations are based on unbiased data, it is hard to see how "health" and "education" can foster human development as long as there is no freedom. Respectfully, Luis" |
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Subbalakshmi, IIT BBSR, India wrote: "I want to know that earlier studies have been largely emphasised on income. Are those studies not helpful in anyway? Income enters in logarithemic form. Does it mean earlier studies which have used income in logarithemic form are not relevant?" |
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Jacques Ould Aoudia, Economist wrote: "Congratulation for UNDP ! This new indicator opens the mind on a non economicist way to think. Development cannot be addressed by an exclusive economic approach. Institutions and Political economy, and beliefs which support (or not) formal institutions are more important." |
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Karine Ouellet, Manager wrote: "Hi Luis, I was just thinking the same as you just wrote... I also think it is important to consider that sometimes the top 10 movers of the past decade (2000-2010) had moved down so much before that time frame that they're not necessary doing better today than in the 80's or 90's..." |
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Sydney Tippett, Student wrote: "The GDP is fundamentaly flawed as a metric of development. It measures the costs of social, environmental and even economic degradation as gains. It should be adjusted before it is presented as per capita income!" |
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Lord Macklon, Msc. Ciencias Sociales ONU wrote: "Es muy comprensible apreciar la diferencia entre el indice de DH vinculado al ingreso y el no vinculante.. Cuba es un verdadero reto a invstigar y estoy a favor de continuar desarrollando ideas de Cuba en el ambito educativo y de salud en otros paises, como también apreciaria que Cuba tome las experiencias de otros paises en su desarrollo economico,, creo que es el momento de que el mundo le de la bienvenida a Cuba... es nuestro deber ayudarla y aprender de ella. Respetuosamente. Lord Macklon, Austria Innsbruk" |
